Cattles in negotiations with banks and bondholders as debt deadline expires

STRICKEN sub-prime lender Cattles was yesterday locked in three-way talks with lenders and bondholders in the hope of securing a standstill agreement on its debts.

A £500m portion of its £2.4bn debt pile was due to expire today, but Cattles is hoping to secure a standstill agreement from its lending syndicate, led by Royal Bank of Scotland.

The company is also seeking a standstill agreement with bondholders after it defaulted on an interest payment on a £400m bond earlier this week. If Cattles cannot convince creditors to give it a stay of execution, it could go into administration.

Shares in the doorstep lender have been suspended since April after it discovered that it had miscalculated its bad debt, meaning that provisions for 2008 and previous years were actually higher than first thought.

The debacle saw Cattles part company with chairman Norman Broadhurst and chief executive David Postings.

Seven board members have since been axed, with former audit committee chairman Margaret Young to be installed as executive chairman.

Cattles’ recent problems began in January when it abandoned plans to obtain a banking licence in the face of opposition from the Financial Services Authority. The lender had pinned its hopes on becoming a bank and had planned to build up £1bn of deposits by the end of 2010.