Cala denies sale talk on bank move

Housebuilder Cala Group has appointed investment bank Rothschild as an adviser on its business plans, but yesterday played down reports that it is up for sale.

The firm is currently in the process of winding down its finance and commercial property businesses to become solely a house builder, following a major restructuring last year.

Edinburgh-based Cala, which was saved from failure last December by a massive debt-for-equity swap with lenders, said the appointment was at an "appropriate time" following a "period of solid trading".

The hiring of the adviser comes after former Rothschild banker Anthony Fry was appointed to the chair of Cala in October. Fry was also head of investment banking at the former Lehman Brothers until 2007. Details of the restructuring in the firm's accounts show that it swapped 280 million worth of debt for the bulk of its shares with its lenders, Lloyds Banking Group.

As a result, net debt for the group as of 30 June totalled 140.5m. Although the firm had a turnover of 115m and stocks and cash valued at 302m, its net assets were valued at just 28m due to liabilities.

The board noted that the group "is still considered to be highly geared".

Cala's current funding arrangements are agreed with Lloyds until 30 June 2013. A spokesman for the group said: "Cala is not up for sale."