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Lookers due to hold crunch talks with banks as unscheduled trading update looks set to be made tomorrow

Time 11 months ago

Lookers are set to hold crunch talks with their banks amid reports a trading update will be made to the Stock Market tomorrow.

Car Dealer reported last week that the dealer group was finally due to announce an update on its financial position for 2019 this week.

Sky News is reporting that an unscheduled update may be made tomorrow as the troubled dealer group begins talks about refinancing its £250m revolving credit facility.


However, it is unclear whether this will clear up the accounts matter and instead only focus on recent trading.

Car Dealer reported in June that crunch talks with banks were needed amid fears auditors were struggling to sign the company off as a ‘going concern’.

Lookers – like most car dealers – breached their banking covenants during the Covid-19 crisis, but unlike stronger competition the group was in poor shape going into the crisis.

Auditors are unlikely to sign off accounts and confirm businesses can survive unless they are completely confident they can, and with Lookers that currently isn’t possible.


Then, Mike Allen, an analyst of the motor retail sector for Zeus Capital, told Car Dealer that Lookers was dealing with two very ‘large and serious issues’ with fraud and the FCA.

He said: ‘This has been an extraordinary period for the sector and Lookers. They went into [the coronavirus crisis] with problems and there will be concerns across the sector from auditors about signing firms off as a going concern.

‘They will be a worry that if there is a second spike and businesses are locked down again how car dealers will survive. This isn’t just car dealers, it is all industries.’

The finalisation of the 2019 numbers is one of a three-pronged set of problems for the dealer group, which suspended its shares in July.

It’s also waiting for the results of an FCA investigation and grappling with an internal fraud probe.

One car industry specialist told Car Dealer that the results were a near ‘impossible task’ to compile as they combined the ramifications of the fraud investigation and FCA battle, just as the firm is battling Covid-19 shutdowns and potential issues from Brexit and further local restrictions.

Timeline

August 20, 2020 – Accounts delayed for the fourth time and no promise given as to when they’ll be published.

June 9, 2020 – Lookers says it will suspend shares on July 1. Delays accounts for third time and says they’ll be published ‘no later than the end of August 2020’.

June 5, 2020 – Lookers says it will axe 12 dealerships, cut 1,500 jobs.

May 2020 – Pendragon CEO Bill Berman admits he wrote to Lookers to discuss a merger and updates Stock Market to that effect. Move described as ‘two drunk men bumping into each other in a bar’.

April 2020 – Fraud investigation deepens. £4m charge revealed and firm says there could be more. Delays accounts to June.

March 12, 2020 – New chief operating officer Cameron Wade leaves role after only a month in post

March 11, 2020 – Lookers delays results saying in final stages of preparation ‘potentially fraudulent transactions’ in one division were discovered. Promises results in April.

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November 2019 – Chief executive Andy Bruce and chief operating officer Nigel McMinn leave firm abruptly

June 2019 – FCA launches review into sales processes at Lookers between January 2016 and June 2019. Lookers cannot ‘estimate what effect, if any, the outcome of the investigation may have’.

December 2018 – Lookers launches independent internal audit into sales process. It eventually finds ‘control issues’ in sales process where ‘improvements’ are needed. Findings handed to FCA.

James Baggott's avatar

James is the founder and editor-in-chief of Car Dealer Magazine, and CEO of parent company Baize Group. James has been a motoring journalist for more than 20 years writing about cars and the car industry.

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