LONDON Oct 2 Pawnbroker Albemarle & Bond
said on Wednesday efforts to agree a cash injection
from its biggest shareholder had failed and it was now in talks
with its banks on options to remedy potential covenant breaches.
Britain's second-largest pawnbroker said on Sept. 30 it had
approached EZCORP International for an equity raise of
35 million pounds ($57 million) after being hit by the tumbling
price of gold.
"Unfortunately, the company has not been able to conclude
these negotiations to the satisfaction of the board," it said.
At 0710 GMT, shares in the company were down 32 percent to 47
pence, giving it a market valuation of 26 million pounds.
The group had a market valuation of 224 million pounds in
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
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 said it had agreed with its lending banks a
deferral of the Sept. 30 covenant test until Oct. 30, and was
now in "constructive discussions" with banks on how to remedy
potential covenant breaches.
Albemarle & Bond, whose debt stood at 51 million pounds at
Sept. 30, said it would also appoint a chief restructuring
officer by Oct. 10 and would be delaying the release of its full
year financial results as talks are underway.