Abbeycrest breaks covenants with financial backer

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Leeds-based firm blames rising precious metal costs for difficulties.

Shares in Abbeycrest, one of the UK’s most venerable jewellery manufacturers, plunged 30 percent today after it disclosed it had broken covenants agreed with its key backer, Burdale Finance.

The value of shares has almost halved in the past six weeks for the business, which operates manufacturing plants in the Far East and supplies jewellers in the UK and elsewhere.

In a trading statement earlier in December the company said that it is being squeezed by higher precious metal costs and downward pressure on prices. It said it was taking measures to restore margins and reduce costs.

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Today, Abbeycrest told the London Stock Exchange: "As stated in the Trading Update of 16 December 2010, the Group was at risk of breaching its profit covenants with its senior lender, Burdale Financial. This has now occurred and the management is working closely with Burdale to reset these covenants."

Abbeycrest has been battling back from a £10m loss reported in the 2008-9 financial year, and appeared to be making progress when it posted a £1.6m profit in the 12 months to February 28, 2010.

The turnaround was mainly credited with a cost-cutting programme that saw 150 jobs axed and the majority of production shifted to the Far East.
 

 

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