ASOS shares fall amid talks with lenders to change borrowing terms

LONDON, Oct 17 (Reuters) – ASOS (ASOS.L) 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 pound ($394 million) loan to provide more flexibility in tough economic times.

Shares fell 8.6% at 0723 GMT, extending losses so far this year to 80%.

ASOS announced on Saturday that it is in the final stages of agreeing to amend future financial obligations under its revolving credit facility, which matures in July 2024.

It said the move would give it significantly increased financial flexibility amid an uncertain economic backdrop and was a “prudent step”.

The statement was issued after Sky News reported that ASOS had recently approached its lenders, including Barclays (BARC.L)HSBC (HSBA.L) and Lloyds Banking Group (LLOY.L)to amend its borrowing agreements.

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

ASOS, which sells fashion to 20-somethings, was an early winner of the pandemic as locked-out consumers shopped online, but struggled as people returned to stores.

It warned last month that it expected pre-tax profit in the year to 31 August 2022 to be around the lower end of its guidance of £20m-£60m after weaker-than-expected sales in August.

It also forecast full-year net debt of around £150m, higher than previous guidance.

The Sky News report also said that at least one major trade credit insurer, which provides cover for ASOS’s suppliers in the event of default, has decided to reduce its support.

“This happened at the end of August and there was no adverse impact on trading relationships with our suppliers,” ASOS said.

ASOS is due to announce its 2021-22 results on Wednesday.

($1 = £0.8880)

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