Shares in Provident Financial, the subprime lender, continued to fall sharply on Wednesday as fears the company will announce a rights issue followed Tuesday's disappointing trading update.
In October the company reported that it expected losses from its doorstep lending business in the region of £80m-£120m. In Tuesday's trading update, the company confirmed an expected full-year loss of "approximately £115m". The shares lost 12.6% on Tuesday
Rights issue fears
Concerns that the company will now have to raise equity amid cash squeeze concerns saw the shares fall as much as 20% in early trade on Wednesday.
The company faces around £35m in repayments to lenders in the coming weeks and reported cash reserves of just £34m, plus £66m in bank covenants at the end of 2017.
Gary Greenwood at Shore Capital said on Tuesday: "Although we think the group will avoid breaching debt covenants in a redress scenario, we now think an equity raise to replenish resources is increasingly likely, with a resumption of dividend payments also delayed."
Profit warnings and FCA probe
Provident's problems don't stop here. Following two profit warnings last year, the company revealed in December that it was under regulatory scrutiny from the Financial Conduct Authority for the sale of repayment option plans (ROP) - loan products that have likened to PPIs.