Cattles Share Discussion Threads

[redd] 08/7/2009 15:42

Fitch Ratings-London-08 July 2009: Fitch Ratings has today downgraded Cattles
plc's Long-term Issuer Default Rating (IDR) to 'RD' from 'CC'. Fitch has
simultaneously downgraded Cattles' Short-term IDR to 'RD' from 'C'. The
company's senior unsecured bonds' Long-term rating has been affirmed at 'C'
with a Recovery Rating of 'RR5'.

'RD', or "Restricted Default" ratings indicate an issuer that in Fitch
Ratings' opinion has experienced an uncured payment default on a bond, loan or
other material financial obligation but which has not entered into bankruptcy
filings, administration, receivership, liquidation or other formal winding-up
procedure, and which has not otherwise ceased business.

The rating action follows confirmation by Cattles that it will not pay the
coupon on its GBP400m 7.125% bonds, due 2017, that fell due on 6 July.


Fitch's rating definitions and the terms of use of such ratings are available
on the agency's public site, www.fitchratings.com. Published ratings, criteria
and methodologies are available from this site, at all times. Fitch's code of
conduct, confidentiality, conflicts of interest, affiliate firewall, compliance
and other relevant policies and procedures are also available from the 'Code of
Conduct' section of this site.

[cpl593h] 07/7/2009 14:14

'Course if you have default insurance, you don't necessarily care either way.

[spectoacc] 07/7/2009 13:18

Totally agree with that iii post; there's no mileage in putting CTT into admin when can keep the business running & wipe out the shareholders regardless.

[grahamburn] 07/7/2009 13:08

Alistair4444. Agreed, especially as the newly appointed directors/staff are specialists in restructuring.

[alistair4444] 07/7/2009 13:00

A good post on the iii this morning --- "They may not be lending new money, but they are shedding costs as well. I agree that their hand is poor, but what is the alternative for the banks, and in particular RBS. I think there may be a little bit of HMG intervention going on at the moment to minimise the tremor if CTT was to go bust. Likewise, if the business is in such a no hope situation, why has the BoD not called in the Administrators? Also, why hasn't RBS pushed for Administration? The Directors would leave themselves very exposed if they were spending creditors funds frivolously in a business that was beyond recovery. They are playing a canny game and will re surface.

I reiterate, the fact that no administrator has been appointed strongly suggests that the Company has not alienated its lenders and that the BoD believe they can trade out of the situation. The banks MUST be semi comfortable to have not issued recovery proceedings"

[grahamburn] 07/7/2009 12:45

Just a thought... could the non-payment on the bonds have been implemented so that preference is not given to ANY of the debt instruments until such time as a deal is agreed on the whole restructuring (if any)? Not an expert, but wonder if there may well be legal implications had one been paid and another not.

[spectoacc] 07/7/2009 12:40

It's a worry that the bond default wasn't "agreed"; slightly surprising, although could be it doesn't mean much. Standstill needs confirming asap.

Also seems to give a lie to the notion that they're raking in cash atm; I'm sure they wouldn't have taken the decision to default on the bond lightly.

[propane] 07/7/2009 11:32

Cattles admits missing £400m bond payments
07 July 2009
By Hamish Rutherford
CATTLES, the troubled subprime lender, confirmed yesterday it had failed to make interest payments on a bond that were due on Sunday, as the deadline for renegotiating its bank debt looms.
The company, which provides loans to consumers with poor credit histories, is battling to renegotiate £635 million of debt it owes to a consortium of banks, led by Royal Bank of Scotland, with a deadline of this Thursday.

It confirmed it had failed to make interest payments on a £400m bond but insisted progress on the banking issue was still being made.

It said in a statement: "The issuer continues to be in constructive discussions with all of its finance providers and will provide a further update shortly."

Cattles, whose shares were suspended from trading in April, is trying to secure a standstill agreement, under which its lenders would agree to suspend interest payments to give it additional breathing space.

Heavily dependent on wholesale funding, Cattles has suffered from a lack of available credit and bad-debt writedowns during the banking crisis.

There have also been internal issues. Last week, it parted company with a number of its senior executives due to alleged financial irregularities.

[killieboy] 07/7/2009 11:20

Kiss goodbye to this one now - surely?

[cpl593h] 06/7/2009 19:07

I wonder:

Is this deemed a 'credit event'?

Are there CDSs written on the debt?

If so, who were the buyers, who were the writers?

[spectoacc] 06/7/2009 10:39

They do need to get that standstill signed though:

"8. EVENTS OF DEFAULT
If any of the following events occurs and is continuing, then the Trustee at its discretion may and, if so requested in writing by holders of at least one quarter in principal amount of the outstanding Bonds or if so directed by an Extraordinary Resolution, shall (subject, in the case of the happening of any of the events mentioned in Conditions 8.2 to 8.13 below, to the Trustee having certified in writing that the happening of such event is in its opinion materially prejudicial to the interests of the Bondholders and to the Trustee having been indemnified and/or provided with security to its satisfaction) give written notice to the Issuer declaring the Bonds to be immediately due and payable, whereupon they shall become immediately due and payable at their principal amount together with accrued interest without further action or formality (each such event being an "Event of Default"):

8.1 Non-payment
the Issuer fails to pay any amount of principal in respect of the Bonds on the due date for payment thereof or fails to pay any amount of interest in respect of the Bonds within three days of the due date for payment thereof, provided always that in either case such failure does not occur because of technical or administrative reasons;"

[grahamytrain] 06/7/2009 08:20

whoops...RNS already on board...

[spectoacc] 06/7/2009 07:44

CATTLES PLC

GBP400,000,000 7.125% bonds due 2017, ISIN: XS0308397149 (the "Bonds"),
issued pursuant to a Trust Deed dated 5 July 2007 (as amended from time to
time) (the "Trust Deed" between Cattles plc (the "Issuer") and HSBC Trustee
(C.I.) Limited
Coupon due 5 July 2009
The Board of the Issuer wishes to inform the holders of the Bonds that it will
not make payment of the coupon due on 5 July 2009 in accordance with the
provisions of the Trust Deed. The Issuer continues to be in constructive
discussions with all of its finance providers and will provide a further update
shortly.


Not really unexpected; whatever deal's worked out is likely going to include the bondholders somehow.

[catmanboogie] 02/7/2009 19:06

Loans firm Cattles sacks six bosses over 'irregularities'
Jul 2 2009 by Henryk Zientek, Huddersfield Daily Examiner

CONSUMER loans firm Cattles has sacked six senior bosses following a probe into accounting irregularities which blew a £700m hole in the company's balance sheet.

Senior executives – including finance director James Corr and chief operating officer Ian Cummine – have left following "a breakdown in controls" which resulted in its policies on bad debts being applied incorrectly.

It is understood this involved deferring and extending repayment terms on under-performing loans to avoid making a loss provision in the accounts.

Birstall-based Cattles uncovered the breakdown in controls in February and warned in April that provisions for 2008 and previous years would be £700m higher than expected.

The six bosses have been suspended since March.

The Financial Services Authority is believed to have details of the probe by Deloitte and Freshfields and is considering whether to take further action.

Shares in Cattles are suspended after the firm delayed its annual results to resolve the accounting crisis.

A statement by Cattles said: "Following the board's consideration of the results of the independent review, the employment of each of these six suspended senior executives has been terminated with immediate effect.

"In addition, Mark Collins, currently treasury and risk director of Cattles plc, is leaving the company with immediate effect. None of the departing executives will receive any compensation for loss of office."

The statement said a number of other employees at group and subsidiary level would face disciplinary action.

It said: "Cattles is continuing to keep its relevant regulatory and supervisory bodies informed of its progress in addressing the serious issues which have arisen."

The firm is also labouring under looming deadlines on its £2.4bn debt burden. It is due to make payments to bondholders as well as re-financing £500m in wholesale funding with a bank consortium led by Royal Bank of Scotland by July 14.

Cattles is pushing for a "standstill agreement" which will see these payments suspended while it resolves its future.

The company said last week it was in "constructive" talks with its creditors in a bid to gain more breathing space.

In April, it announced it would close its Welcome Car Finance car loans business to conserve cash, while it is also considering the sale of its invoice financing arm. The main Welcome Finance business is still up and running, but has suspended lending to new customers.

[quepassa] 01/7/2009 23:40

The wording about Postings' departure is intentionally opaque. The RNS says he "... has decided to step aside" but gives zero explanation or reason why he has decided to step aside. One can but draw one's own conclusions about that. "Woz 'e pushed or did 'e jump", is a potential question which many commentators may well be asking themselves.

Relevant extracts from pages 82 and 83 of the April 08 Rights Issue document concerning the CEO and Executive Director service contracts and termination thereof may or may not give some detail about leaving pay.

Either way - and ignoring the additional question of compensation for loss of office- it sounds to me in my view only like twelve months pay for Postings according to the April 08 Rights Issue prospectus if I have read this correctly and if the service contracts have not been amended in the meantime(unlikely in my opinion):-


5.2 Service contracts
The Executive Directors' service contracts have common terms and are rolling contracts requiring a
written notice period of not less than one year to be given by the Company and not less than six
months to be given by the relevant Executive Director, save in the case of D J Postings who is
required to give not less than 12 months' written notice. The Company has the right to terminate an
Executive Director's employment by paying to the relevant Executive Director the remuneration which
he would have been entitled to receive from the Company in respect of the relevant period of notice.
If an Executive Director ceases to be employed, for any reason, by the Company before the end of
the financial year, any bonus payment will be at the sole discretion of the Remuneration Committee.
When determining the amount of any compensation paid to a departing Executive Director, the
Remuneration Committee will take into account the relevant Executive Director's obligation to
mitigate his loss, to the extent it is possible to do so under the terms of the relevant contract.


All IMO. DYOR.

QP

[cpl593h] 01/7/2009 21:12

Grahamburm, share price (almost 50%) lower than 15 years ago tells me a story....ntg personal against them (in fact I own bonds).

[grahamburn] 01/7/2009 20:32

cpl593h. Surprised you lump AV (Aviva??) in with the others mentioned. Hardly a basket case. It has strong fundamentals, though the dividend payout might just be suspect, and a professional management.

[wooly62] 01/7/2009 18:58

Compensation and notice are technically different, but I agree with you 6 weeks is the key. Good!

[cpl593h] 01/7/2009 17:59

e-venturer - From the moment that we allowed clerks to start paying themselves as if they were entrepreneurs: CTT, NRK,RBS, AV, HBoS and other wealth-destroyers, too numerous to list, the money came in and went straight back out, into the bank accounts of (mostly senior) staff.

[e-venturer] 01/7/2009 15:51

I think there was no compensation because Cattles simply does not have any money. Which then begs the question as to where it all went?

[spectoacc] 01/7/2009 15:10

Failed to file a/cs so can't be relisted yet. I'd wager they won't want to show s/holders any a/cs until the AGM vote is safely in the bag; suicide otherwise.

Good point about the bonuses paid on fictitious results; were they also suspended on full pay? Quite handy for early summer. Going to be a few grumbles about the rights issue being done on incorrect information too.

[wsm812] 01/7/2009 14:56

I'll wager that it is re-listed by the AGM, making it an easier show to handle for them!

[grahamburn] 01/7/2009 14:55

Wooly62. Think you've misread the RNS. The relevant paragraph says:

"David Postings has also decided to step aside as Chief Executive and will leave the Group immediately. However, to assist with an orderly handover, he has agreed to be available to the Company on a consultancy basis for a period of six weeks."

Six WEEKS consultancy NOT six MONTHS!

And it does say that NONE of the departing executives will receive any compensation for loss of office. So assume that includes Postings.

[wooly62] 01/7/2009 14:31

I read the Postings severance as his 6 months notice - hence he's agreed to assist during that period. Good that he's gone as clearly he failed to manage at the required level or the misrepresentation could never have occurred. For the other departees I don't think it's just the quantum that's the consideration, it's presumably dismissal for gross incompetence or gross negligence. Of course they were probably on full pay whilst suspended, but I doubt they've found new jobs during that period so still face the same issues as any other redundant employee (and no I'm not defending anyone dishonest or inept, but I feel sorry for everyone without a job).