Cattles prepares £39m restructure deal
TROUBLED lender Cattles is preparing to cut its losses in relation to its Welcome Financial Services division in return for £39m.
The company revealed that as part of a restructuring plan the Cattles would compromise its inter company debt claims against Welcome for “not less than £39m” if the parent firm or certain subsidiaries are sold to a new company.
In a statement on ongoing discussions about the company’s future, Cattles said it would use the money to meet its own costs and to help meet its debts to creditors which are estimated at £2.8bn.
The company said: “Those discussions remain constructive and demonstrate continuing progress towards a consensual restructuring of the Group although there remain a number of commercial, legal and regulatory issues to be resolved before any such restructuring can be finalised.”
Cattles has been in difficulties since April 2009 when an £850m black hole was uncovered in its accounts and the company today repeated its warning that creditors are likely to suffer a losss of around £1bn and that its shares have “little or no value”.
In a trading update, the company said Welcome Finance’s loan book had met its forecast for the first nine months of the year while Shopacheck and The Lewis Group had made “satisfactory progress” during 2010.
Short term loan operation Shopacheck tightened its loan criteria in response to the deteriorating economic picture and saw volumes fall as a result. The net book value of loans and receivables at the end of September was £54m compared to £64.3m at the end of last year.
Debt recovery division the Lewis Group boasted cash collections of £76.3m in the first nine months of the year compared to £70.9m in 2009.
