Pawnbroker Albemarle fails to agree cash injection, shares tumble

Reuters

LONDON, Oct 2 (Reuters) - Pawnbroker Albemarle & Bond said on Wednesday efforts to agree a cash injectionfrom its biggest shareholder had failed and it was now in talkswith its banks on options to remedy potential covenant breaches.

Britain's second-largest pawnbroker said on Sept. 30 it hadapproached EZCORP International for an equity raise of35 million pounds ($57 million) after being hit by the tumblingprice of gold.

"Unfortunately, the company has not been able to concludethese negotiations to the satisfaction of the board," it said.At 0710 GMT, shares in the company were down 32 percent to 47pence, giving it a market valuation of 26 million pounds.

The group had a market valuation of 224 million pounds inJuly 2011.

Albemarle & Bond, which two years ago launched an ambitiousexpansion plan as it heralded "the age of the pawnbroker", hadprofited from the steep rise in gold prices and tightened banklending, which drove more cash-strapped customers to itscounters.

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

The company said it had agreed with its lending banks adeferral of the Sept. 30 covenant test until Oct. 30, and wasnow in "constructive discussions" with banks on how to remedypotential covenant breaches.

Albemarle & Bond, whose debt stood at 51 million pounds atSept. 30, said it would also appoint a chief restructuringofficer by Oct. 10 and would be delaying the release of its fullyear financial results as talks are underway.

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