Albemarle reveals gold price pain
The pressure on pawnbroker Albemarle & Bond to secure a buyer for its business was highlighted today following a collapse in full-year profits.
A 27% slump gold prices since March and rising competition in a sector that has more than doubled in size over the past five years resulted in profits tumbling to £4.9 million in the year to June 30, from £21.4 million.
Since then, Albemarle has been trading at a loss and is in danger of breaching financial covenants while it looks to secure its future before the end of a three-month reprieve from its lenders at the start of February.
Rival chain H&T is understood to be one of a number of trade and financial buyers that have formally lodged interest in buying Albemarle, which put itself up for sale last week.
Other potential bidders include Albemarle's biggest shareholder EZ Corp, the US pawnbroking giant, as well as New York vulture fund Apollo Global Management, the Sunday Times reported.
Albemarle, which also trades as Herbert Brown, has reduced the size of its estate to under 200 sites, having closed its pop-up gold buying stores.
Its pledge book, the amount outstanding on advances to customers on pawnbroking loans, reduced by £3 million to £37 million in the last financial year.
The company recently revealed that measures taken to remain within its £53.5 million borrowing limit included a clampdown on lending through its Speedloan and online arm, as well as a ''programme of exceptional smelting'' of gold items bought by its stores.
It has also seen a mass exodus of board directors, with five of its six non-executives recently quitting with immediate effect - leaving chairman and former chief executive Greville Nicholls as the only remaining non-executive at the pawnbroker.
The firm remains in talks with its lenders after it was given a three-month reprieve at the end of October to patch up its overstretched finances.
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