INTERVIEW-Pendragon plans further sales of non-core assets

LONDON, Aug 28, 2008 (Reuters via COMTEX) -- PDGNF | Quote | Chart | News | PowerRating -- British car dealer Pendragon Plc plans to sell further non-core assets to help reduce debt although there were "no current issues" with its banking covenants, its chief executive said on Thursday.

Chief Executive Trevor Finn said the company, which earlier this year axed 500 jobs and sold non-core assets to cut debt now standing at 287.6 million pounds ($528.7 million), was putting another 56 million pounds of surplus property up for sale.

"This will be turned into hard cash which will further reduce our debt," Finn said in a telephone interview.

He said the level of disclosure and clarity on its debt position meant the group's bankers were "still supportive".

"There are no current issues over our banking covenants that are keeping me awake at night. We're managing our debt and working capital, while the group is still generating good levels of cash," Finn added.

The group had seen its shares fall sharply over the past year as the credit crunch and a slowdown in consumer spending put new and used car sales under pressure.

Investors had been concerned that the group, capitalised at around 60 million pounds, might be close to breaching some of its banking covenants.

On trading, Finn said the British new car market was set to remain difficult for the remainder of 2008 and throughout 2009.

"We're expecting new car sales to be down by around 15 percent in the second half of 2008, similar to the run-rate we've seen over the past couple of months.

"In contrast, our used car volumes are holding up well as consumers have traded down and are now buying more older, lower-priced, second-hand vehicles," he added.

He said the aftersales and support services operation had held up well and was helping to underpin group profitability.

Even so, profits for the full year to end-December 2008 are likely to be "well down" on last year. The current range is for pretax profit of between 18.0 million pounds and 22.0 million, down from 46.5 million last year.

"I don't see any real recovery in the UK new car market until 2010," said Finn.

Earlier, Pendragon reported sharply lower first half profits and slashed its interim dividend.

(Reporting by Malcolm Locke; Editing by Mike Elliott) ($1=.5440 Pound) Keywords: LOOKERS/ tf.TFN-Europe_newsdesk@thomsonreuters.com ajb

COPYRIGHT

Copyright Thomson Financial News Limited 2008. All rights reserved. The copying, republication or redistribution of Thomson Financial News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Financial News.

MMMM

More News:   Market Updates | Stock Alerts | All Trading News | Stock Index