NEW evidence of the financial squeeze facing private-equity buyouts emerged this weekend with news that three high-profile deals have run into trouble.

The latest revelations will add to growing concern that the huge wave of buyout activity seen since the late 1990s has spurred companies to take on unsupportable levels of debt.

The Sunday Times can today disclose that:

Stead & Simpson, one of Britain’s oldest shoe-shop chains, has bust its borrowing limits just one year after agreeing a £51.4m buyout backed by Bank of Scotland Corporate;

The leisure conglomerate Danoptra, which was taken private in a £118m deal in 2002, has been forced to ask its lenders for new banking facilities after a downturn in trading at one of its two divisions;

Private-equity groups Duke Street and Apax are battling to save their investment in Focus, one of Britain’s biggest DIY chains. They are locked in restructuring talks with Focus’s creditors to try to avoid insolvency.

These latest signs of the acute financial stress facing private-investment groups have emerged just days after the Little Chef roadside restaurant group narrowly averted bankruptcy by clinching a rescue deal.

Stead & Simpson, Britain’s third-largest specialist footwear chain, is based in Syston near Leicester. It employs about 3,700 staff and has 420 shops across the UK trading under the Stead & Simpson, Shoe Express, Lilley & Skinner, Famous Footwear and Peter Briggs brands.

The group is now in restructuring and refinancing talks with HBOS, which provided the majority of the debt for the buyout, and took a small equity stake. Investec is understood to have provided a small mezzanine debt facility worth about £5m to £6m. Insiders are confident that a deal with the banks can be struck.

Stead & Simpson has also embarked on a strategic review led by the new managing director, David White, who joined the business at the end of October from WH Smith, where he was in charge of the retail travel division.

White has been lined up to replace chief executive David Lockyer under a previously planned succession programme. City sources now say the process is likely to be accelerated Stead & Simpson posted flat sales of £141.5m and pre-tax profits of £5.8m in the 2005 calendar year, the last for which financial results are available at Companies House.

But turnover is expected to have retreated since then and profits have come under severe pressure. The blow follows a difficult year for footwear retailers, who have been stung by warm autumn weather which has exacerbated poor trading conditions.

John Shannon, Stead & Simpson’s chairman until the buyout, collected £10m following the deal, while Development Securities, the listed property company which owned a 39% stake, received £13m.