Some Cattles Bondholder Creditors Exit Restructuring Talks

Cattles PLC (CTT.LN), a door-to-door lender which saw massive losses during the financial crisis, said Wednesday that some of its bondholder creditors have exited talks on how to revive the company.

These bondholder creditors, who hold roughly one-third of the value of the company's outstanding bonds, and their advisers "have ceased and do not intend to re-instigate negotiations with Cattles' other key financial creditors in respect of any solvent restructuring" of the firm, Cattles said in a statement.

This forces the management of Cattles to continue restructuring talks with the rest of its bondholder creditors and its main creditor, Royal Bank of Scotland Group PLC (RBS).

The exit of the bondholders comes after the Court of Appeal in May upheld a decision by the High Court to give RBS precedence over bondholders in the ranking of creditors.

Cattles needs to be in a more solvent position to keep collecting the money in its loan book. Otherwise, there wouldn't be much cash to share amongst Cattles' creditors.

Despite the exit of some bondholders from the talks, Cattles said "it remains in the interests of all parties to reach an agreement."

"Therefore, Cattles and its advisers continue to engage in ongoing constructive discussions with representatives of certain of its key financial creditors still with a view to achieving a consensual restructuring of Cattles' liabilities, including an offer to acquire the share capital of Cattles at up to 1 pence per share."

On June 2, it said the options being discussed with creditors included a proposal under which a newly incorporated company would make an offer to buy Cattles at a nominal value of up to 1 pence per share.

The Batley, north England-based firm's board has said it "regrets the serious loss" suffered by shareholders--whose shares now have little or no value--but its legal obligation is to give priority to the interests of the company's creditors.

It also said in June that it is clear the size of the deficit from its 2009 accounts will have increased significantly from the GBP745.3 million loss at the end of 2008 because of further impairments on the loan book.

Cattles, which used to lend to people with poor credit histories, only released 2008 results this May after it unearthed a massive shortfall in its impairment provisions a year earlier.

-By Vladimir Guevarra, Dow Jones Newswires; [phone], [e-mail]