Bosses at Premier Direct Group, based at Simonside East Industrial Estate, South Shields, have warned shareholders that talks with lenders may not be successful.

The firm sells toys, gifts and books in the workplace through a large sales network of more than 500 self-employed staff, who distribute products to a variety of organisations, such as schools, hospitals, businesses and local councils.

But the company needs more cash and decided to suspend its shares on the Alternative Investment Market while talks take place with lenders.

No one was available for comment at Premier Direct's South Shields headquarters, but the company issued a statement through the London Stock Exchange.

A spokesman said: "The company is initiating urgent discussions with its lenders, but shareholders should note there can be no guarantee that the results of these discussions will lead to a favourable outcome for the company."

The company last month announced an improved half-year profit of £924,000. But the shopping at work company has seen its revenue fall from £12.7m to £10.7m.

Premier Direct has suspended trading in its ordinary shares "pending clarification" of its financial state.

The statement added: "The directors finished a review of its short to medium-term cash flow projections and have concluded that additional financial support is required for the business to continue trading."

Premier Direct is one of the biggest shopping-at-work companies, distributing thousands of books and novelty goods throughout the UK.