Torex Retail, the struggling software group, has been thrown a financial lifeline guaranteeing its survival for six months, The Times has learnt.

The company’s main lender, the Royal Bank of Scotland (RBS), has agreed to increase its banking facility by between £20 million and £30 million, and an announcement is expected this week.

The deal was struck after RBS called in KPMG, the accountancy firm, to review Torex’s cash position when the company issued a profit warning and suspended its shares on January 26.

Torex revealed that debt would be £23 million higher than expected because of a number of contracts to supply point-of-sale software to retailers being delayed, only eight days after issuing a statement to the City detailing a number of new contract wins.

The AIM-listed company is under investigation by the Serious Fraud Office, the Financial Services Authority and the London Stock Exchange.

By the end of its financial year, December 31, 2006, Torex had used up the vast majority of a £152.5 million facility supplied by RBS, leaving the company with headroom of only £4.8 million.

By the end of the year Torex had about £9 million in cash across the company and, since the profit warning, it has been producing daily reports on its cash position.

It is understood that RBS agreed to extend the facility for six months based on the company’s new management and its belief Torex housed a viable business.

Since giving warning on profits, the company’s management has drafted in the accountant Deloitte to examine its financial stability.

Chris Moore, the non-executive chairman of Torex, and Neil Mitchell, its chief executive, have stepped down, although it is believed that Mr Mitchell is attempting to be reinstated and has retained SJ Berwin, the City law firm, to advise him.

Mr Moore has been replaced as chairman by Geoffrey Forster, the senior non-executive director of Torex.

Keith Taylor, a turnaround expert who previously worked in the NHS and for the software group Morse, is acting chief executive of Torex.

Last week Mr Taylor told The Times: “We are having very constructive discussions with our lenders. I am very confident that these constructive discussions will lead to a positive outcome.” He also said that he had been in contact with a number of Torex clients.

On January 24 Torex told RBS that £23.1 million of contracts would be delayed into its next financial year, ending December 31, 2007. These include £10 million of deals with McDonald’s, the fast-food chain, £1.2 million with the pub group Spirit and £800,000 in contracts with the clothing retailer Matalan.

Neither RBS nor Torex would comment.

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