Angry investors demand investigation as Homebuy calls in administrators

News Article - 18 September 2006
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Angry investors in a company valued at £100 million have demanded an investigation after it entered administration last week amid accusations of poor accounting.

Homebuy, which specialised in selling plasma-screen TVs to people with poor credit ratings, had recorded record profits up 347 per cent just seven weeks previously.

"We have also significantly strengthened our capital base ... we believe we are well placed for the future," said a company statement accompanying the first-quarter profit report.

The Alternative Investment Market (AIM) halted trading in Homebuy shares on August 10th after a consortium of banks refused a request for a £100 million loan.

Sources close to the discussions say that the negotiations were halted after the consortium took a close look at the company's accounting policies.

The AIM is now to investigate Homebuy's policy of recording profit at the point of sale.

The company typically charged 29.9 per cent interest on each £300 television, so each deal generated around £1,000. Money was raised from shareholders to ensure cash flow.

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