Albemarle & Bond says covenant tests deferred until February

LONDON Wed Oct 30, 2013 7:41am EDT

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LONDON Oct 30 (Reuters) - Pawnbroker Albemarle & Bond said its lenders have agreed to push back a test of its banking covenants by three months as its new Chief Executive seeks to turn around the struggling business.

Britain's second-largest pawnbroker, whose net debt stands at 49.9 million pounds - just below the limit of its 53.5 million pound banking facilities - on Wednesday said it lending banks had pushed back the covenant test date to Feb. 3, 2014, from Oct. 30, 2013.

The company said previously efforts to agree a cash injection from its biggest shareholder had failed earlier this month and that it was in talks with its banks on options to remedy any potential covenant breaches.

It said last month it had approached EZCORP International for an equity raise of 35 million pounds ($56 million) after being hit by the tumbling price of gold.

Albemarle & Bond, which two years ago launched an ambitious expansion plan as it heralded "the age of the pawnbroker", had profited from the steep rise in gold prices and tightened bank lending, which drove more cash-strapped customers to its counters.

Gold prices have however fallen more than 20 percent this year on expectations that an improved global economic outlook would lead the U.S. Federal Reserve to curb quantitative easing, which has created significant uncertainty over the company's current prospects, it said.

The company, whose new CEO Chris Gillespie started earlier this month, said its markets continued to be challenging but that its new management was making "good initial progress" in reviewing operations.

Rival pawnbroker H&T Group is faring better and last month reported a 27 percent rise in like-for-like sales during September.

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