Cattles' loans are extended

EMBATTLED sub-prime lender Cattles said yesterday it extended the maturity of its &pound;500m banking facilities until the end of the year, although it still has other crippling debts.<br /><br />The business said its syndicate of 22 banks, led by Royal Bank of Scotland, had agreed to give it breathing space by extending the facility, which was due to expire yesterday.<br /><br />The Batley-based firm, which owns the Welcome Finance consumer loans business, is labouring under debts of &pound;2.4bn and has been hit by accounting irregularities which blew a &pound;700m hole in its balance sheet.<br /><br />Cattles added it was in further talks with banks and debt-holders about stabilising its financial position alongside &ldquo;discussions around a wider restructuring of the group&rdquo;.<br /><br />The group also said it was still in discussions with all its creditors over a formal &ldquo;standstill agreement&rdquo; which will see payments to its bondholders suspended while it resolves its future. Earlier this month it defaulted on bondholder payments.<br /><br />A source at the group said yesterday&rsquo;s loan extension was a &ldquo;momentary bit of release&rdquo; in what remains a serious situation. The source added: &ldquo;But clearly this is a step in the right direction.&rdquo;<br /><br />Cattles&rsquo; accounting problems, which saw it fail to issue full-year results this year, came after it could not obtain a banking licence which would have enabled it to finance itself more cheaply through retail savings deposits rather than expensive wholesale funding.<br /><br />The group has closed its Welcome Car Finance arm to save cash, and may sell its invoice-financing division.