ASOS Confirms Talks With Lenders Regarding Revolving Credit Facility

  • ASOS confirms revolving credit facility media speculation
  • ASOS said it will increase financial flexibility
  • ASOS demand has declined, but metrics have stabilised in recent weeks

ASOS (LON: ASC) shares tumbled over 10% early on Monday after the company confirmed reports from the weekend that it’s in the final stages of agreeing on an amendment to its borrowing agreements regarding its Revolving Credit Facility, which matures in July 2024.

Sky News reported over the weekend that the online fashion retailer, in recent weeks, approached the banks involved in its £350 million revolving credit facility to seek an amendment to its borrowing agreements.

Lenders such as HSBC, Lloyds Banking, and Barclays were said to be speaking to potential advisors AlixPartners and law firm Clifford Chance regarding the “unfolding situation.”

ASOS confirmed the final stages of talks in a release on Monday, explaining that the action will provide the company with “increased financial flexibility, against the uncertain economic backdrop.”

The company also declared that it “retains a strong liquidity position” and the move is a “prudent step” given the current macroeconomic environment. 

In July, we noticed the demand for ASOS products was declining as inflation weakened consumer wallets. However, that has stabilised in the last few weeks, although the company’s most recent trading update stated that sales in August were weaker than anticipated, and it sees full-year profit at the lower end of guidance. 

ASOS will report its final results on Wednesday, October 19.

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