Albemarle in ‘precarious position’ after cash setback

Albemarle & Bond, which has its head office in Wakefield, said it had not been able to conclude negotiations with its biggest shareholder over a deeply-discounted rights issue, which it needs in order to repair its balance sheet.

The company is now focused on talks with its lenders after they agreed a month’s breathing space on covenant tests due on the £51m debt pile.

Albemarle said the deferral agreement included the appointment of a chief restructuring officer by October 10.

The company also said it would be delaying the release of its full year financial results.

Shares in Albemarle slumped by 59.42 per cent yesterday, closing at 28p last night.

The group has around 230 stores, including 24 branches in Yorkshire, and owns Leeds-based Herbert Brown, which dates from 1840.

Andrew Watson, an analyst at N+1 Singer, said the latest developments placed the company in a “precarious position”.

He added: “Albemarle now has a reduced lending facility and faces the prospect of a near-term restructuring approaching a covenant test at the end of this month.

“We believe that this could result in store closures and staff reduction.”

The company has been slashing costs, including through the closure of 33 pop-up gold buying stores, as it looks to overcome the impact of the sliding gold price on its finances.

The group has recently appointed a new chief executive in Chris Gillespie from doorstep lender Provident Financial.

But the outcome of four months of talks with Texas-based EZCORP, its biggest shareholder, over underwriting the £35m cash call failed to win the backing of Albemarle’s board.

With the test of its banking covenants now delayed until October 30, Albermarle said it was focusing its efforts on “constructive discussions with the banks to explore all possible options to remedy potential covenant breaches later in the current financial year.”

The price of gold has plunged by about a third over the past two years, squeezing the group’s profitability and leaving it at “high risk” of breaching banking covenants.

Albemarle’s pop-up stores, which bought jewellery for cash, are no longer profitable.

Albemarle & Bond, which two years ago launched an ambitious expansion plan as it heralded “the age of the pawnbroker”, had profited from the steep rise in gold prices and tightened bank lending, which drove more cash-strapped customers to its counters.