Cattles, the doorstep lender whose sub-prime clients have been falling behind on their payments, may be receiving a knock on its own door at its head office in Batley, West Yorkshire.

When the rata-tat comes, the pin-striped bankers from its lending syndicate are likely to be clutching a demand for a debt-for-equity swap, which will leave Cattles’ investors with very little, according to James Hamilton, the Numis analyst, who has a 1p price target.

Cattles dropped its dividend last week and in conversations with analysts said that the FSA looked unlikely to give it a banking licence until it could persuade its lending syndicate to roll over some or all of its £500 million loan, which is due for repayment in July next year. It had only £129 million cash at the end of November, but must repay $40 million (£27 million) of bonds this month, while customer arrears are growing faster than its loan book. Mr Hamilton said that he could not see why banks would provide a new loan at an acceptable price given that Cattles’ bonds are trading at half their face value.

Citigroup, the company’s house broker, said that Cattles may breach bank covenants and be forced to cease making new loans and run off old ones to pay back the debt. Citi cut its price target from 46p to a “run-off” value of 18p, saying that it would take only a 1 per cent rise in its cost of funding or the bad debt charge to breach covenants. Cattles’ shares fell by 5p, or nearly a third, to 10¾p.

Blue Oar was flat at 13p as Andrew Brough, of its largest shareholder Schroders, said that he would not back Evolve’s current all-share offer and wanted 20p cash.

Norcros, the bathroom tiles maker, rose 0.88p to 4.88p amid director buying.

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