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Charcol directors pay £1.5m to fill cash gap

John Charcol directors have stumped up £1.5m to plug a hole in the company’s accounts after its auditor KPMG warned of “material uncertainty” of the firm continuing as a going concern.

A director’s report, signed February 8 by director Ian Kennedy, says three of the company’s key directors – John Garfield, Jon Moulton and Charles Wishart – have put in additional loan funding of £1.5m as an “interim measure” before either a sale or a refinancing involving existing investors.

Each of the three investors provided £500,000, with the funds being received and the stock issued between December 31, 2007 and January 2, 2008.

The directors’ report forms part of the accounts for the year ended December 31, 2006 which were filed last month, over three months late.

They show that the company incurred a net loss of £41,000 during 2006, and its parent company’s liabilities exceeded its assets by £150,000.

The accounts include a statement from John Charcol’s auditors, KPMG, which warned of a “material uncertainty which may cast significant doubt on the group and the parent company’s ability to continue as a going concern.”

They also show that £820,000 of loans due to have been repaid in June 2007 have been deferred to April 2008 at the latest.

Key investors have agreed to defer existing repayment obligations and committed to make funds available for at least 12 months from the dates of approval of the accounts.

John Charcol put itself up for sale at the beginning of this year with a valuation thought to be around £50m.

A Charcol spokesman says: “When John Charcol was bought back from Bradford & Bingley, it was a hugely underperforming company, making a loss of £4.7m in 2005. In 2006, this figure had reduced significantly to just £41,000.

“The group is dependent on the support of its investors to continue to fund the business. The £1.5m was a short-term measure prior to a full-scale refinancing or sale. The current investors have stated that they will continue to support the business if a sale is not forthcoming.”

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