ASOS confirmed it was in the final stages of agreeing an amendment to its revolving credit facility after reports that after a leading credit insurer cut cover for its suppliers.
Allianz Trade reduced its insurance cover for ASOS suppliers by more than half, media reported over the weekend, which could force Asos to pay for products up-front, tightening the squeeze on the company’s cashflow.
“This action will give ASOS significantly increased financial flexibility, against the uncertain economic backdrop. ASOS retains a strong liquidity position and this is a prudent step in the current environment,” the company said.
Reports said the company, scheduled to report full-year results on Wednesday, recently approached the banks behind its £350m revolving credit facility to seek an amendment to its borrowing agreements.
Lenders including Barclays, HSBC and Lloyds Banking Group were lining up AlixPartners and law firm Clifford Chance to advise them on the unfolding situation.
Last month, it said annual profits for the year to August 31 would be “around the bottom end” of a previously indicated £20m-£60m range.
Reporting by Frank Prenesti for Sharecast
