Lenders give pawnbroker more time

Updated: 
Britain's second-biggest chain of pawnbrokers has been given a three-month reprieve by its lenders to patch up its overstretched finances.

Albermarle & Bond, which has seen profits hammered by the slumping price of gold, said its banks have agreed to defer a covenant test on its £50 million debt pile until February 3.


The group, which includes Herbert Brown jewellery and pawnbroking stores, said it " continues to explore all options to maximise value for all stakeholders", while attempting to fix its financing and banking covenant problems.

The price of gold has plunged by about a third over the past two years, squeezing the group's profitability and leaving it at ''high risk'' of breaching banking covenants with its lenders Barclays and Lloyds.
Reading-based Albemarle's attempts to secure a £35 million cash injection from its biggest shareholder EZCORP flopped earlier this month when talks on a deeply-discounted rights issue were aborted.

Albemarle has been slashing costs, including closing 33 pop-up gold buying stores from its 230-store estate, and n ew boss Chris Gillespie said he is considering turnaround options to improve trading.

Mr Gillespie, who joined recently from doorstep lender Provident Financial, said its stores have been running on an "as usual" basis while he considers the company's future.

Mr Gillespie said: " Today's further covenant testing date deferral agreement is testament to our constructive working relationship with the banks and to their support while we explore a range of financing, strategic and turnaround options.

"I am encouraged by the quality of our stores, our offering and our people and am confident that there is a sustainable and competitive future for the business."

Albemarle had already asked for the test of its finances to be pushed back by a month to October 30.

The group said it plans to update on its plans "as soon as is practicable", followed by the release of its 2013 results.

Albemarle's £49.9 million debt on October 25 was within its £53.5 million facilities.

Analysts at Shore Capital stockbrokers said: "The immediate danger that the banks might pull the plug on Albemarle & Bond has passed, we think, and is clearly shown by their willingness to defer the covenant tests until February 2014.

"A rights issue is not off the table as a financing option, we believe, and indeed we believe that this would be the best way forward for the group given the level of indebtedness."

The company was founded in Bristol in 1983 with a single shop.