DFS close to £70m loan and prepares equity issue

Sofa maker DFS is in the advanced stages of negotiating an additional debt facility of £60m-£70m with its existing lending banks.
By Mark Casci
Published 20th Apr 2020, 07:51 BST

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The cash is to supplement the existing bank facility of £250m. This additional facility will cover the near-term working capital unwind until sofa deliveries can resume.

Alongside this additional debt facility, the Company is preparing for a possible non pre-emptive equity issue of up to 19.9% of its existing ordinary share capital, further strengthening the group's balance sheet, and providing resilience for a continued disrupted trading environment.

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DFS said that further updates will be made as and when appropriate.

DFSDFS
DFS

Alongside the financing actions, the company has also made further progress with regards to reducing its monthly cash operating costs following positive discussions with suppliers and landlords, together with continued support from the Government.

The group's mitigated operating cash outflow is now expected to be less than £14 million per month until the Group's showrooms, manufacturing and distribution operations re-open.

Since the announcement made by the Company on 25 March 2020, the group's websites have remained operational and continue to see strong momentum, with dfs.co.uk online gross sales up by 20.2% over the period from 25 March 2020 to 17 April 2020. Consequently, the Group's order banks have grown to a total of approximately £192m from approximately £185m.

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A spokesperson said: "The Group has in place all measures that are necessary and appropriate for warehouse activities to operate. Its DFS and Sofology trading subsidiaries are receiving inbound deliveries of customer orders from Far East manufacturers, and Dwell is dispatching parcels from its accessories warehouse. The Group intends to restart sofa deliveries once it is clear there is a safe and workable approach for two-person installations into customer homes."

He added that 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.

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