Laura Ashley Understood To Be Seeking £15m Lifeline From Hilco Capital

Laura Ashley has published a financing and trading update following reports over the weekend that the company is close to falling into administration, and is in advanced talks with Hilco Capital - the owner of Homebase - to secure £15m in emergency funding.

The retailer employs around 2,700 staff and operates 150 UK stores.

Current trading

During the six weeks to 7 March 2020, total sales were 27.7% ahead of the equivalent period in 2019 and gross profit was 22.2% up on the equivalent period, ahead of management expectations. Whilst the Company has not yet seen a significant financial impact due to COVID-19, the Company believes that it has the potential to negatively influence future trading as a result of reduced footfall and continues to monitor the situation closely.

Financing update

Further to the announcements of 19 February 2020 and 20 February 2020, the Company has continued to review its funding requirements. As explained in the recent Interim Results, there has been a reduction in the amount that the Group can draw down under its debt facility with the incumbent lender to the Group.

In addition to the £5.0 million already drawn down under this facility, as part of the Company's ongoing review, it has determined that the Group will need further funding to meet its ongoing working capital requirements.

The Company continues to engage proactively with its key stakeholders, particularly MUI Asia Limited and the trustees of the Laura Ashley retirement benefits scheme. MUI Asia Limited has confirmed that it is continuing to actively consider the provision of an additional £10 million facility to further support the Company's proposed turnaround plan.

The Company is in advanced discussions with a third-party lender to provide facilities of up to an additional £15 million to meet the Group's working capital requirements. This process is being managed by Arrowpoint Advisory and the debt funding will need to be in place by no later than the end of March 2020.

If the Group is unable to secure commitment for the requisite level of funding by the end of March to satisfy its ongoing working capital requirements and turnaround plan, then the Company will need to consider all appropriate options.

Director Appointment and Resignations

The Company announces that Mr Chan Choung Yau has been appointed as a non-executive director of the Company with effect from 14 March 2020. This appointment was undertaken pursuant to the continuing relationship agreement between the Company, Malayan United Industries Berhad (the "MUI Group") and MUI Asia Limited. 

Mr Chan Choung Yau is currently the Group Executive Director of the MUI Group. He is a Chartered Accountant with the Malaysian Institute of Accountants and a Fellow of the Association of Chartered Certified Accountants in the United Kingdom. He currently holds directorships in the MUI Group, MUI Properties Berhad, Pan Malaysia Corporation Berhad and Pan Malaysia Holdings Berhad, each of which are listed on Bursa Malaysia Securities Berhad.

In addition, both Professor Jane Rapley and Mr Leon Yee have resigned as independent non-executive directors of the Company with effect from 15 March 2020. The Company intends to review the composition of its Board and committees as a consequence of the changes described above and will provide a further update in due course.

Source : Laura Ashley

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