Cattles says it won't pay bond interest, and remains in talks with its creditors

TROUBLED British sub-prime lender Cattles yesterday said it would not make a bond interest payment originally scheduled for 5 July, as talks over its bank debt approach a key deadline.<br /><br />Cattles, whose shares were suspended in April, added that it was still in &ldquo;constructive discussions&rdquo; with its creditors, and that it would issue a further statement &ldquo;shortly&rdquo;.<br /><br />The company, hit by accounting problems which led it to underestimate its bad debts by about &pound;700m, is hoping to negotiate a standstill agreement on a &pound;500m bank loan that expires on Thursday. Cattles, which lends at higher-than-average rates of interest to people who cannot get credit from mainstream banks, also has &pound;400m of bondholder debt maturing in 2017.<br /><br />The lender, dependent on expensive wholesale funding, earlier this year failed to obtain a banking licence which would have allowed it to finance itself more cheaply through retail savings deposits.<br /><br />Last week it culled its finance director and five other senior executives after an audit into accounting errors.