Pawnbroker and gold buyer Albemarle & Bond is seeking to raise about £35 million through a rights issue as it tries to avoid breaking its banking covenants.
Although the firm said it current net debt of £51m was “well within” the limits of its £65m borrowing facilities, it was at “high risk” of breaching its earnings-based covenants, and its banks had agreed to defer today’s testing date until the end of next month.
Albemarle & Bond, which also announced the appointment of financial services industry veteran Chris Gillespie as its chief executive, said the ongoing weakness in gold price “creates significant uncertainty over the company’s prospects for the current financial year to 30 June 2014 and for the company’s profitability”.
Having recently closed 33 “pop-up” gold-buying stores that were no longer profitable, the group has also held talks with its largest shareholder, Ezcorp International, about underwriting a £35m right issue, at 50p a share, that would be open to all shareholders.
It said: “The company is in the final stages of seeking to conclude the agreements necessary to enable the announcement of such a rights issue, alongside the company’s final results.
“However, there can be no certainty that such agreements will be concluded, nor that the rights issue will proceed.”