In a decision to further conserve cash
and improve liquidity, the troubled subprime lender Cattles Plc has
announced its proposal to close its car retail and finance arm,
Welcome Car Finance (WCF).
Around 130 staff will lose their jobs
as a result of the decision, Cattles said, with the cost of closing
WCF estimated at £5 million.
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The management team at WCF’s parent,
Welcome Financial Services, was recently suspended and a forensic
investigation launched into the lender’s accounts, over fears that
banking covenants have been breached (see April’s Motor
Finance).
Cattles is currently in continued
discussion with the numerous banks which provide most of its
funding, along with holders of its outstanding Eurobonds and US
Private Placement Notes.
So far this year, WCF has “traded
successfully”, Cattles said, running off its existing stock of
vehicles through its 12 showrooms.
“However, without additional funds to
acquire new stock, the business model will become unviable and it
is likely that Welcome Car Finance will start to absorb cash,”
Cattles added.
