ASOS Shares Slump After Retailer Confirms Talks to Amend Credit Facility
2022.10.17 05:35
© Reuters.
By Scott Kanowsky
Investing.com — Shares in ASOS PLC (LON:) fell sharply in early trading on Monday after the British online fashion retailer confirmed over the weekend a report that it is in negotiations with its lenders over changing the terms of its £350M borrowing facility.
In a statement released on Saturday, the U.K-based firm said that the talks over an amendment to its revolving credit facility, which matures in July 2024, are in their “final stages.”
“This action will give ASOS significantly increased financial flexibility, against the uncertain economic backdrop,” it added. “ASOS retains a strong liquidity position and this is a prudent step in the current environment.”
The comments came after Sky News first reported that ASOS had approached the banks. The lenders, including Barclays (LON:), HSBC (LON:) and Lloyds Banking Group (LON:), were also hiring advisors regarding the situation, according to Sky News, in a move that could lead to potential financial restructuring at ASOS.
ASOS, which had seen a surge in demand during the pandemic, has struggled following the lifting of Covid-era restrictions.
Last month, the company warned that its full-year pre-tax profit will be near the bottom of its guided range of £20M – £60M after August sales missed estimates. Pressures from soaring inflation were also blamed for leading consumers to pull back on spending.
ASOS is set to deliver its annual earnings on Wednesday.
Shares have fallen by nearly 78% over the past one-year period.
