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DFS has confirmed that it is in the advanced stages of negotiating an additional debt facility amid the ongoing coronavirus pandemic.
The furniture retailer is now seeking between £60m and £70m of funding with its existing lending banks in order to supplement its existing bank facility of £250m.
This additional funding will reportedly cover the group’s near-term working capital unwind until its sofa deliveries can resume after the nationwide lockdown.
In its latest update, DFS announced it is also preparing for a “possible” non preemptive equity issue of up to 19.9% of its existing ordinary share capital.
The group said the move would “further strengthen” its balance sheet and “provide resilience for a continued disrupted trading environment”.
The retailer revealed it has also made further progress in reducing its monthly cash operating costs following “positive discussions” with suppliers and landlords, as well as “continued support” from the government.
The group’s mitigated operating cash outflow is now expected to be less than £14m per month until its showrooms, manufacturing and distribution operations re-open.
Since its last trading update on 25 March, DFS also confirmed that its websites have remained operational and “continue to see strong momentum”, with online gross sales up by 20.2% between 25 March and 17 April.
Consequently, the group’s order banks have increased to £192m, up from £185m in the same period.
It intends to restart sofa deliveries “once it is clear there is a safe and workable approach for two-person installations into customer homes”.
In its latest statement, DFS said: “The combination of the proposed additional financing together with the operating cost mitigation measures is expected to, when agreed, give the group significant liquidity to see through an extended lock-down.
“The board is confident that the group can navigate the COVID-19 crisis and deliver its strategy over the longer term when the trading environment normalises.”
