Cattles set to say farewell to the stock market

The Batley-based group said its restructuring via a so-called scheme of arrangement yesterday became effective after it won the approval of the High Court.

A new private company, Bovess Ltd, will buy its shares for just £5.3m, allowing it to collect out its loan book away from the gaze of public markets. Cattles’ equity was worth almost £1.5bn before the financial crisis.

The group, which started in Hull in 1927, lent money to cash-strapped households. It was brought to its knees by a long-running accountancy scandal, which saw its proportion of bad debts understated for years.

Cancellation of Cattles’ shares is expected to take place on Monday, and the 1p per share payment to shareholders is expected by March 16.

Executive chairman Margaret Young said: “The board of Cattles is pleased to announce that the various schemes of arrangement to permit the restructuring of the group’s finances, which received the sanction of the High Court on Monday, have today become effective. The restructuring is therefore now completed.

“This is in itself a significant achievement which seemed highly unlikely two years ago when we faced potentially the immediate financial collapse of the group. However, with the support of our main financial creditors and after an extended period of complex negotiations, we have stabilised the group’s financial position, implemented the managed contraction of Welcome Finance and to date collected over £1.1bn of its outstanding loan book, with more to come.

“We have restored the group’s two remaining trading subsidiaries, Shopacheck and The Lewis Group, to profitability and continue to develop both businesses.

“I believe this has produced the best possible outcome for all concerned.”

Bondholders, noteholders and banks were together owed about £2.4bn by Cattles and its main subsidiary, Welcome Finance.

Last year, the Supreme Court ruled in favour of Cattles’s banks, giving them the right to recoup the biggest proportion of Cattles’ outstanding loans. Bondholders owed £750m are due to receive a £49m settlement.

Avoiding administration means the company will be able to continue clawing back debt from its customers. If Cattles had fallen into administration, the company had warned it was likely to recoup far less money from its 600,000 customers.

It would also have thrown about 2,500 jobs into doubt. Instead, jobs will be shed as the company shrinks.

Cattles, which will continue life as a private company, expects a two-to-three-year wind down, with the restructuring giving a “stable platform” to do so.