Credit hire firm Accident Exchange warned it starts 2010 still at risk of breaching its covenants but said it is nearing a conclusion with its banker over extended working capital facilities.
It also said it remains uncertain whether it will have suffificient funding to fulfil its vehicle acquisition plans to replace its ageing fleet, which could be gloomy news for prestige and specialist franchises.
Its current facilities are due to expire on September 30 this year.
On a positive note, Accident Exchange has narrowed losses to £6.5m from £16.4m last year, while turnover dipped to £61.6m from £85m.
Lower revenues reflected the effects of the credit crunch on motor dealership activity, motoring journeys and associated accident rates, it said.
It also said it was pursuing legal claims against Autofocus, which provides spot hire rates. Accident Exchange claims in some cases Autofocus’ information on car hire rates were incorrect.
"We have also embarked on a programme of strategic change to refocus the group's activities on higher margin prestige business from our automotive and manufacturer referral partners, historically the mainstay of operations. We have already secured two significant new prestige manufacturer referral contracts and have allowed one low margin referral relationship to lapse.
"Over the next few months we will reduce the size of our mainstream fleet further, commence materially fewer lower margin hire starts and so reduce the working capital requirements of the business. To align the cost base of the refocused business and, after a period of consultation with our staff, as announced recently, annualised reductions in fleet and employment related costs of around £24 million are targeted to be attained by the end of the current financial year at an estimated cost of c.£2 million to be incurred in the second half of the current financial year," continued Accident Exchange's statement.