Asos shares decline in talks with lenders to change borrowing terms

Asos shares fell sharply on Monday after the British online fashion retailer said it was in talks with lenders to change the terms of a £350 million ($394 million) loan facility. dollars) to provide more flexibility in tough economic times.

The stock was down 8.6% at 0723 GMT, taking losses so far this year to 80%.

Asos said on Saturday it was in the final stages of agreeing an amendment to the future financial covenants of its revolving credit facility, which matures in July 2024.

He said the move would give him significantly increased financial flexibility in an uncertain economic environment and was “a prudent step”.

The statement was released after Sky News reported that Asos had recently approached its lenders, including Barclays, HSBC and Lloyds Banking Group, to change its borrowing arrangements.

Sky News said the lenders were lining up AlixPartners and law firm Clifford Chance to advise them on an “ongoing situation”.

Asos, which sells fashion in its 20s, was an early winner in the pandemic as confined consumers shopped online, but struggled as people returned to stores.

He warned last month that he expected pre-tax profit for the year to August 31, 2022 to be around the low of his forecast of £20-60m after August sales. lower than expected.

It also forecast net debt for the full year of around £150m, which was higher than earlier forecasts.

The Sky News report also said that at least one major trade credit insurer, which provides cover to Asos suppliers in the event of non-payment, has reportedly decided to reduce its support.

“This happened towards the end of August and there was no negative impact on business relationships with our suppliers,” Asos said in response.

Asos is due to release its 2021-22 results on Wednesday.

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