We have been approached by a City institution with a view to investigating a claim against Cattles PLC. Cattles specialises in offering finance to clients who may have been rejected by the mainstream banks for having poor credit rating for example.
In April 2008 Cattles unveiled plans to raise £200 million by way of the Rights Issue. According to the Rights Issue prospectus the purpose of the Rights Issue was to support an application to the FSA for a banking licence which would help them diversify into the retail banking deposits market. The FSA rejected the application in January this year.
The Rights Issue offered shareholders the right to subscribe for 9 new shares for every existing 20 shares at an issue price of 128p (‘the Rights Issue’).
We are currently carefully examining the Prospectus and all surrounding factors with a view to sustaining a claim for compensation. In particular we are examining the effect of alleged attempts made by Cattles to mislead the stock market to influence the share value and entice shareholders to take up the Rights Issue.
We are also considering the position on behalf of those shareholders who subsequently purchased shares in Cattles and have sustained a loss of share value and we would encourage such shareholders to also contact us.
The FSA are currently investigating Cattles in relation to reasons why a £850 million “Black Hole” in Cattles’ loan provisioning was kept from the shareholders for over two years in breach of the banking covenants which subsequently sent the share value to as low as 1p per share leaving a substantial amount of shareholders with significant losses. Cattles has stated that there was a “breakdown in internal controls” which has led to them failing to fully account for their bad debts. Cattles will now have to restate its 2007 accounts.
Six directors were sacked as a result of their involvement in the matter. The FSA are attempting to establish whether directors deliberately or recklessly made misleading statements to the stock exchange to support the rights issue. If found guilty the directors can be jailed for a maximum of seven years.
A further investigation is being carried out by the Accountancy and Actuarial Discipline Board into Cattles’ Accountants, and Cattles’ Auditors, PriceWaterhouseCoopers.
It is considered that there is a good prospect of obtaining compensation on behalf of members of the Action Group.
It is our belief that the Prospectus omitted information within the knowledge of the Board of Directors or which ought to have been reasonable for the Board to obtain by making inquiries that investors and their professional advisers would reasonably have required and would reasonably expect to have found there for the purpose of making an informed assessment of the financial position and the prospects of Cattles.
The Prospectus was obliged to take into account all existing investors, not just professional investors. It therefore should have set out all relevant facts clearly and simply in a manner which private investor shareholders in Cattles could understand. Furthermore Cattles failed to fully account for its bad debts.
Our Firm specialises in Class Actions on behalf of Investors who have subscribed for Shares pursuant to a Share Issue Prospectus or a Rights Issue Prospectus and over a period of time dating back over 18 years we have had some considerable success. We currently act for the RBS Rights Issue Action Group and the Bradford and Bingley Rights Issue Action Group with a view to obtaining compensation for our clients.
We are proposing to submit a Claim Letter in due course on behalf of all members of the Action Group. We will only pursue a claim if we have arranged adverse costs insurance whereby all members of the Action Group will be protected by insurance against an adverse costs order. This means that you would be protected against any liability to pay the defendants costs.
In the first instance we are inviting shareholders to join the “Cattle’s Shareholders Action Group” with a view to ultimately pursuing if so advised a claim for compensation.
There is of course strength in numbers and our experience is that membership of an Action Group can quickly grow especially with attendant publicity which we would seek to generate if appropriate.
We understand that a large percentage of the Cattles Shareholdings are held in Nominee accounts. If you have shares held by Nominees please click here.
If you are interested in joining the Cattles Shareholders Action Group or would like more information regarding this matter please either send us an email to info@leonkaye.co.uk or contact Mr Leon Kaye or Mr. Jamie Berry on 020 7228 2020.