STRUGGLING car retailer Pendragon has quietly shelved the sale of a software subsidiary it hoped would raise cash to buy it time in negotiations with its banks.

Last month The Sunday Times revealed that Pendragon, the UK’s largest car retailer, planned to sell Pinnacle, an IT firm that provides back-office software for dealerships. It was estimated the business would fetch up to £60m.

However, it is understood the sale has now been put on hold because a buyer has not been found.

Pendragon, which has been built up by chief executive Trevor Finn through several acquisitions, has been hit hard by the slump in car sales.

Its shares have collapsed this year, losing just over 95% of their value to finish the year at 1Çp. The company’s stock-market value is now £11.5m. Two years ago Pendragon paid £500m to buy Reg Vardy, one of its biggest rivals.

It was reported yesterday that Pendragon has agreed a waiver from its banks on an end-of-year test of whether it meets covenants on its loans. A waiver would allow more time to negotiate with lenders in the new year.

The company declined to comment, but senior sources said it was looking at “all options” and that a debt-for-equity swap had not been ruled out.

To cut costs, Pendragon has already laid off staff and closed outlets. The company has also pointed to the steady revenue it expects from its after-sales service business.

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