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 July 2011.
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 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.