25th Mar 2014 12:30
LONDON (Alliance News) - Albemarle & Bond Holdings PLC Tuesday went into administration after its lenders withdrew all support for a potential turnaround of the business, the end of a tumultuous few months which included the pawnbroker smelting down jewelry to try and raise funds to save itself.
Albemarle had said Monday that its lenders withdrew their support for management's turnaround plan, and the remaining options for the company, which included a sale of the business for less than than its current debts, meant its shareholders would likely lose all their investments. It had until the end of the month to find a solution as that's when its debts became due and it didn't have the money to pay them.
However, Tuesday, the company said its lenders had decided that those remaining options weren't capable of being concluded, and therefore Albemarle's board had decided not to request a extension of the debt covenant deferral beyond the end of the month.
"Consequently, and in the absence of any other available facilities from its lenders or elsewhere, the company will shortly be unable to meet its liabilities as they fall due. The board has therefore concluded that, in such circumstances, the appointment of an administrator is the most appropriate course of action," it said in a statement.
It said it would file Tuesday morning notice of intention to appoint four insolvency practitioners from PricewaterhouseCoopers LLP as joint administrators to Albemarle as soon as is practically possible.
Albemarle & Bond had warned its shareholders back in January that there may be little residual value left in its shares, after it terminated a formal sale process, claiming none of the proposals it had received represented a fair value for the company.
The pawnbroker started the formal process to sell the business at the beginning of December, after it struggled to turn the business around since being hit by the sharp fall in the gold price earlier in the year. Its profits and revenues tumbled, leaving it struggling financially. In an attempt to stem declines, the group began the smelting down of jewellery and stock to sell as gold bars and closing down unprofitable stores and pop-up gold shops.
The company's net debt was nearing the limit of its GBP53.5 million bank facilities.
In January, Albermarle said its lenders had agreed to extend the covenant test until the end of March, from February 3 previously, giving it more time to try and turn around the business and resolve its financing situation.
However, that time has now run out.
By Steve McGrath; [email protected]; @stevemcgrath1
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