Torex Retail has been hit by
another hammer blow as low profit levels will cause it to break its banking
covenants. The struggling corporate is expected to publish full-year operating
profits of £23m, less than half the City forecast of £53m.
The figure was detailed in a report compiled by
it was parachuted in by Torex’s management in an advisory capacity. The firm is
understood to have drawn up the analysis for Big Four counterpart KPMG, which is
conducting a review for the
Bank of Scotland Torex’s main lenders.
Previously, Torex conceded that delays in supplying software would knock
profits and would result in higher than expected debt. Analysts forecast that
debt would total £203m by December 31 last year — 8.8 times operating profits.
Lender requirements state that debt should never be more than 3.5 times profits.
Despite the company’s difficulties, which include investigations by the
Serious Fraud Office, the Financial Services Authority and the Stock Exchange,
RBS appears to have shown faith in the embattled corporate by extending its
banking facility by £15m.
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