Cattles Share Discussion Threads

[alistair4444] 25/11/2009 17:22

RNS Number : 0971D
Cattles PLC
25 November 2009

?
Cattles plc
25 November 2009


?CATTLES PLC


SIGNING OF STANDSTILL AND EQUALISATION AGREEMENT


Background


Cattles plc ("Cattles" or "the Company") announces that earlier today, following
detailed and extensive negotiations with its key financial creditors, it has now
reached an agreement with those creditors regarding a formal standstill and
equalisation agreement ("SEA"), subject to the approval of the holders of the
2014 and 2017 bonds ("Bondholders") at Bondholder meetings on 17 December 2009.
The Company has also today agreed (subject as described above) certain
modifications to the terms of its bank facilities, private placement notes and
bonds. Consent Solicitation Memoranda ("CSMs") have been sent to the Bondholders
today to call the Bondholder meetings on 17 December 2009.
The signing of the SEA and these modifications should improve the likelihood of
the Company achieving its restructuring objectives, namely:
* to stabilise the financial position of the Company and its subsidiaries ("the
Group"); and
* against this background, to continue discussions with the Company's key
financial creditors with a view to agreeing a consensual restructuring of the
Group.

Key terms of the SEA


The SEA was signed today by the Company, Welcome Financial Services Limited
("WFSL"), certain other members of the Group and, among others, lenders of
certain syndicated and bilateral facilities to the Company ("Banks"), certain
guaranteed hedging counterparties ("Guaranteed Hedging Counterparties"), certain
unguaranteed hedging counterparties ("Unguaranteed Hedging Counterparties") and
holders of certain private placement notes issued by the Company
("Noteholders").


It is anticipated that the SEA will become effective on 17 December 2009 (the
"Effective Date") when HSBC Trustee (C.I.) Limited will accede to the SEA as
trustee for the Bondholders, subject to the formal approval of the Bondholders.
The Company has received irrevocable undertakings from Bondholders representing
79.91 per cent. of the 2014 bonds (by nominal value) and 77.81 per cent. of the
2017 bonds (by nominal value) to vote in favour of the resolutions to be
proposed at the Bondholder meetings and therefore the Company expects that such
resolutions will be duly passed.


The key provisions of the SEA are summarised in the annexe to this announcement.
Those key provisions include:
* Standstill: A formal agreement by the key financial creditors to "stand still"
and therefore agree not to take enforcement action against the Company, WFSL or
other members of the Group for a limited period of time as set out further in
the Annexe below under 'Period of Standstill'.
* Cash distributions: Obligations on WFSL to distribute the majority of cash
generated by the Group to the key financial creditors, subject to the right of
WFSL to forecast and retain a provision for working capital requirements and
other contingencies. The SEA expressly provides that this forecast will be
prepared on a conservative basis to provide ongoing liquidity.
* Cash management: Obligations on the Company, WFSL and other members of the Group
to ensure that the majority of cash generated by the Group, which is currently
subject to rights of set off in favour of certain key financial creditors,
continues to be maintained in bank accounts that are subject to such rights of
set off in favour of such key financial creditors.



Key financial information


Cattles has also announced today certain information relating to its trading and
financial position including its Interim Management Statement. This information
is also included in the CSMs. The information contained in this announcement is
unaudited and therefore subject to material change. The timing of the
finalisation of the statutory accounts of Cattles and its subsidiaries for the
year ended 31 December 2008 remains uncertain. The financial information
included in this announcement has been prepared on the going concern basis and
under the historical cost convention, as modified by the accounting for
derivative financial instruments at fair value through profit or loss.


The key financial information can be summarised as follows:


* The Company's current view of the loss before tax for the year ended 31 December
2008 is GBP555.3 million and that the profit before tax for the year ended 31
December 2007 would have been restated to GBP22.7 million.
* Cattles has previously announced that it estimated that the Group would need to
make a provision of around GBP700 million in excess of that originally
anticipated with respect to the value of customer loans held as at 31 December
2008. Cattles has also reported previously that it was considering whether to
include an additional incurred but not reported provision of GBP150 million as
at 31 December 2008, consistent with accounting standard IAS39. The income
statement numbers referred to above are after including appropriate charges in
respect of these items.
* The Company considers that the Group's balance sheet at 31 December 2008 would
have been likely to show a deficiency of shareholders' funds of GBP197.0
million, with loans and advances to customers of GBP2.5 billion and gross
external borrowings of GBP2.7 billion.
* The unaudited results of the Group for the nine months ended 30 September 2009,
taken from the management accounts, show a loss before tax of GBP347.4 million.
As at 30 September 2009, loans and advances to customers amounted to GBP1.9
billion and gross external borrowings amounted to GBP2.7 billion (GBP2.3 billion
net of cash at bank).
* The Group continues to generate cash and at 1 November 2009 had cash of GBP392.0
million. Welcome Finance has collected cash (gross of collection costs) of
GBP570.4 million in the nine months ended 30 September 2009.



Serious loss of capital


On the basis of the financial information set out above, the directors of the
Company have concluded that the value of the Company's net assets is now less
than half of its called-up share capital. In such circumstances, the directors
are required by the Companies Act 2006 to convene a general meeting of
shareholders to consider whether any, and if so what, steps should be taken to
deal with the situation.


Accordingly, the directors will shortly send to shareholders a circular
convening a general meeting which is expected to be held on 16 December 2009.


ENDS

[alistair4444] 12/11/2009 11:41

From iii board posted by JoshueTree this morning --------------------- Good morning all

As has been pointed out, Provident Financial dont sell PPI on their core business (home credit), not sure if they do on their smaller 'Welcome style' operation "Real Personal Finance"? I dont think they do. Also, unless the OFT have their way, the CCD will be less impactive to them also as it is currently only applies to loans above £100 and becomes more requiring for loans over £500.

Take a look at Provident Financials share price this morning: 934.50, and it has been performing well all year. I bought PFG at 787 last year, so they are doing well for me. This is one of the underlying reasons that I think that Cattles will re-structure and compete directly with Provident. Its a big market, and there are few other players with any scale, with only S&U plc being of note.

Re: the market - 13.5 million people in the UK are now 'sub-prime' and would not be serviced by a mainstream provider. PFG have 1.7m customers - so there is a huge market to run at. Shopacheck have less than 300,000.

Paulf38 & Dandyman - I agree Shopacheck is currently a very small part of the overall business - however, wind the clock back 7 years or more and that was not the case. Shopacheck was the predominant part of the business. The monthly loan business has only really grown in the last 5 years in particular and the Welcome Board made the deliberate choice to reduce Shopacheck. The larger numbers associated with the Welcome model blinded judgement, in my opinion.

Re: where will the good customers of Welcome go? I think those are the ones the business is relying on easing the run-off Im afraid. I dont think Welcome is particularly concerned about keeping its customers happy - in fact, the more of them that settle their accounts, the better. They need the cash!

Re: the debt remaining with Cattles / Welcome - well, there's life in the old dog yet in terms of run-off, so I can see the banks supporting this concept through a standstill agreement. By closing branches and centralising, you strip out the largest remaining cost, so the businesses ability to repay a reasonable % in the £ is pretty good. Perhaps also some of the loan book or bank debt could be sold to PE firms as part of the run-off.

So - I see Welcome in run-off, Shopacheck growing and the whole notion being supported by the banking syndicate and bondholders.

As I mentioned, its just my view, having studied this business and its market for a couple of years.

JT

[spectoacc] 12/11/2009 10:28

Aye I feel sorry for the rights issue buyers (though no one else; Cattles been clearly bust ever since the black hole was discovered IMO).

Anyone know if the losing side on the recent court case has appealed? Probably what's delaying the standstill, which should have happened months ago. Feels like this could drag on & on: might not even be able to take tax losses before April.

[quepassa] 09/11/2009 16:10

Even if some part of Cattles were phoenixed, shareholders will get absolutely nothing back in my view. Zero.

Whoever signed off on the Rights Issue documents have a lot to answer for.

Cattles is dead meat.

All IMO. DYOR.

QP

[r0n] 08/11/2009 17:39

An article in the Mail On Sunday re - MP's are leaning on Banks not to push companies in to administration .Which i guess would be in the banks interest long term .

[badhshah] 06/11/2009 19:51

I was hopefull till the end of October but now I have lost all hopes.

[snowy42] 06/11/2009 14:26

When,s the big PAY day then anyone ?

[spectoacc] 02/11/2009 07:35

LOL "..Turnaround..". Though there's no question there's a viable business in Cattles - just one not worth nearly as much as the debt. Be very surprised if they ever relisted, how could they? I just think it's shameful how long it's all taking.

[dd776] 01/11/2009 17:38

Big news then. When is the relisting??????????

[badhshah] 01/11/2009 10:21

So the Cattles has been saved then, really!

[demark] 01/11/2009 07:42

the following is from today's (01/11/09) independent.

dyor

Cattles' saviour lands major role at RBS as part of growing restructuring team
By Mark Leftly
Sunday, 1 November 2009

Laura Barlow, one of the key figures in the turnaround of failing sub-prime mortgage lender Cattles, has landed a major role at Royal Bank of Scotland...........

[clarendon] 30/10/2009 15:22

Standstill agreement set to be signed off 'in the next few days', that should trigger a relisting.

[quepassa] 30/10/2009 10:55

If bondholders and bankers are fighting over who is first in the pecking-order for pay-out, it de facto implies that there is not even enough to go around to satisfy senior creditors.

This seems to re-confirm in my opinion that share-holders in the equity of Cattles will unfortunately be totally wiped out.

All IMO. DYOR.

QP

[spectoacc] 29/10/2009 07:42

Thanks for that. You'll note not much mention of shareholders! If bondholders are going to get 10p in the pound - "..Or several times that..if they win the case", it doesn't imply anything left over, and seems to be no appetite for a solvent restructuring atm.

Can see it dragging into next year; whoever loses will no doubt be "obliged" to appeal it.

[catmanboogie] 28/10/2009 23:41

Creditors await Cattles court outcome
By Anousha Sakoui and Jane Croft
Published: October 28 2009 22:19 | Last updated: October 28 2009 22:19

Hearings that could determine the outcome for creditors to Cattles in a restructuring of the troubled subprime lender will start in London's High Court on Thursday.
The hearings are expected to last two days but the case could run until the new year if any decision is appealed against, people close to the situation said.

The case, between Cattles and Welcome Financial Services, will settle an argument between the company's banks and its bondholders over which would rank highest if Cattles went into administration.
Despite the ongoing dispute, a standstill arrangement to avoid a default has been agreed and is set to be signed off in the coming days, the people said.
In exchange for their support, the company's bondholders will receive a cash payment of more than £10m ($16m), half of about £20m in interest due on the bonds.
The case will help determine what bondholders could recover on their investment in a restructuring of Cattles' debt. The bonds are currently trading at about 10 per cent of face value, but one person said they could be worth several times that if bondholders win the case.
The banks believe their claims rank ahead of bondholders because of a guarantee given to the banks by Welcome, a Cattles subsidiary.
The court will be asked to decide, in the event of an administration, whether the construction of this guarantee will mean Cattles' banks and private placement noteholders will receive most of the cash the company gets back from its customers, which bondholders dispute.
A restructuring could still be agreed out of court between creditors.
The company, which provides loans to people with poor credit histories, was thrown into crisis this year after it emerged it had underestimated the provisions it should have made in relation to bad debts.
It is being investigated by the Financial Services Authority over how it accounted for bad loans.
Cattles declined to comment on Wednesday.

[r0n] 28/10/2009 15:56

Just read in the Daily Mail the Gov are gonna encourage a couple of new start up banks ,maybe Cattles might be one of them !!!..Could'nt do any worse than whats out there. imo

[snowy42] 28/10/2009 13:54

when,s the BIG pay out then chaps.

[r0n] 28/10/2009 09:39

I guess we are waiting for the Standstill agreement .

[spectoacc] 19/10/2009 14:33

Can't trade a co in suspension of course; I agree it's v. shoddy how long it's taking for CTT to come out & admit what's now very clear - that there's a good business in there, but that it's not worth a fraction of what's owed to the banks, let alone the bondholders IMO.

(Only way you can trade is if someone closing a short, hence those trades done at 1p a while after suspension. You could try and find a short to sell to (ie them buying to close), but not sure you'd even get 1p now).

[richardbroughton] 19/10/2009 13:47

Hi,Wouldn't have thought that a public (or any other) company can walk away from its debts by liquidating part of itself and carrying on the with rest as normal if that's what you mean. The creditors would a claim on the other businesses both morally and legally. They could sell it but who would buy? When you say liquidate don't know entirely what is meant, to liquidate normally means to swap assets for cash, there are no net assets in Welcome, the liabilities exceed them. Bust is the word! Personally I don't think the company is solvent at present, the total liabilities exceeding the assets. As I said earlier someone knows the figures but they ain't telling us!rgsd Richard

[badhshah] 19/10/2009 12:56

Can there be a possiblity that Cattles management put the wfs into liquidation and keep the other two businesses running? If that is the case then I still belieive that the shares prices will be a lot higher than the suspended price.

[richardbroughton] 19/10/2009 10:22

I'm afraid that there won't be any more sales of this share. It's only being dragged out while the cash collection is working for the banks. It doesn't take this long for a genuine restructing plan or to agree standstills. Everyone in the loop knows the figures by now. Wish it wasn't the case because I 'm down quite a bit.IMHO.

[badhshah] 17/10/2009 12:51

I'm waiting for my average over £2.

I have learnt that one person who spent £250,000 when shares were trading at over £2.50 and never sold till suspenssion.

[curare] 17/10/2009 09:55

you wont be saying this when they re list at 50p!!!

[mary9740] 16/10/2009 17:36

I have some if you want them, curare ive 20000 it will cost me as much to sell them as what they are worth (when i can sell them) another load for the draw