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Cattles suspends executives and issues new alert

Shares in Cattles plummented 40 per cent on Tuesday after the subprime tender suspended three senior executives in Welcome Financial Services , its main operating company , and warned 2008 profits were likely to be 'substantially lower ' than market expectations .
  Cattles had previously warned profits wouild be 'substantially lower' just 11 days ago and sait it expected it would be required to enter into talks with its banks and bondholders , which raised concerns among analysts that it might breach its lending covenants . Cattles shares , whiuch peaked at more than 400p in early 2007 , yesterday fell 2.1p to close at 3.1p.
  Yje lender ha asked Deoiyye to review its bad debt impairment provisions and sait it believed that there had been a breakdown in internal controls that had resulted in its impairment policies having beind applied incorrectly .

  Analysts raised concerns that Cattles , which has delayed its 2008 results , could breach its banking covenants , which would trigger all 2.6bn of its group debt to fall due .
  Analysts had predicted attles would report profits of 170m in 2008 before its previous two profit wrnings , but banking covenants would be breached if interest cover slipped below 1.75 times .

  Hames Hamilton , analyst at Numia , said he believed interest cover would fall below that level if bad debt impairments were 15-16 per cent above his forecast .

   " Cattles dramatically expanded its loan book at the top of the economic cycle and used accouting policies that would allow the group to have loands 240 days in arrears before any impariment was taken to the profit and loss , " he said .

  Cattles is due to refinance a 500m debt facility with a syndicate of 22banks led by Royal Bank of Scotland later this summer , plus a duther 135m facility that falls due to Royal Bank of Scotland in Deember , It has stopped lending to new customers .
  It is feared that some of the banks may not roll over tjeor loans and Cattles is conserving cash so it can repay some or all of that debt if necessary .