iNVEZZ.com, Tuesday, December 3: Shares in Albemarle & Bond Holdings (LON:ABM) plummeted 24 percent this morning after the troubled pawnbroker put itself on the market. Britain’s second largest micro-lender announced after the market close yesterday that its board “considers it in the best interests of the company’s shareholders to seek to sell the business by means of a formal sale process.”
The statement came hard on the heels of notice to the markets earlier in the day of the resignation with immediate effect of the company’s five non-executive directors. According to Numis analyst Andrew Wade, as quoted by The Times, the departure of the five directors appeared to be a cost-cutting measure rather than evidence of a split between directors and non-executive chairman Greville Nicholls.
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Albemarle & Bond has been a major victim of a sector-wide downturn which has seen British pawnbrokers slammed by the slide in the gold price, wiping out much of the easy profit gained during bullion’s recession-era rally.
Last week, the AIM-listed company coughed up nearly 40 percent of its market cap after saying that the operating environment remains challenging ,with no signs of recovery in the key trading metrics of pawnbroking advances or gold buying, and warning that market expectations for the current financial year are significantly more optimistic than its own (Albemarle & Bond share price tumbles on profit warning).
Hitherto, Albemarle & Bond’s share price had plunged 80 percent on announcement of a £35 million emergency rights issue aimed at resolving potential covenant breaches on September 30 and the issue’s failure on October 2. Prior to the rights issue announcement the stock had been at 125p but today’s trading has produced a further 20.1 percent as of 10:07 UTC, way down to 15.18p and valuing the company at just £8.4 million.
Albemarle & Bond, which is 30 percent owned by US pawnshop operator EZCorp (NASDAQ:EZPW), said it was conducting the formal sale process through its financial adviser Canaccord Genuity. According to The Times, the focus will now fall on the intentions of EZCorp, which could decide to either boost or reduce its stake. The Texas-based company already holds a majority stake in UK online micro-lender Cash Genie and a 30 percent stake in Cash Converters International, which has over 700 stores providing take-out financial services and secondhand goods worldwide, including more than 220 in the UK.
In its annual report for the fiscal year to the end of September, EZCorp said it had written down the value of its long-term investment in Albemarle & Bond by $29 million to $10 million. EZCorp refused to underwrite Albemarle & Bond’s 50p-a-share rights issue late September, the main reason for its failure.
EZCorp’s share price fell 1.7 percent to close at $11.48 on the NASDAQ yesterday.
The UK’s largest pawnbroker, H&T Group, could well be interested in Albemarle & Bond but will need to secure antitrust approvals in the UK and Brussels.
**As of 10:01 UTC buy Albemarle & Bond shares at 15.50p.**
**As of 10:01 UTC sell Albemarle & Bond shares at 14.50p.**
**As of yesterday’s NASDAQ close buy EZCorp shares at $12.88.**
**As of yesterday’s NASDAQ close sell EZCorp shares at $11.33.**
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