Goldman: Luminar in danger of covenant breach

Analysts at Goldman Sachs have warned that Luminar, Britain's biggest nightclub group, is in danger of breaching banking covenants.

The banking covenants of the group, which now operates a core estate of 78 clubs, are due to be tested again in August.

Goldman also reduced its estimates for Luminar's 2011 earnings again - in light of falling sales.

The note from Goldman comes after it emerged in May that the group had approached its landlords asking for 20% rent reductions.

However, analysts at the investment bank said the shares could rise sharply if it successfully renegotiates its covenants or in the event that sales should start to recover.

They said: "We believe that Luminar's current share price could be viewed as an 'option' on a successful outcome."

Goldman terminated its coverage of Luminar shares, at 9.3p - an all-time low - valuing its share capital at just £9.33m, against debts of some £90m. The share price has lost almost 99% of their value since their 2007 high.