Laura Ashley shares have recovered in the aftermath of an agreement finally reached between its main shareholder and leading creditor, The Financial Times reported.
The agreement should help the struggling U.K. home and fashion-ware retailer.
The company said in a statement Wednesday that, after discussions between the U.S.-based Wells Fargo and Malaysian group MUI Asia, it should be well-poised to utilize the needed funds from its working capital facility to meet its immediate funding needs.
The retailer said the agreement did not constitute a cash injection from MUI Asia. It said it would continue to look at its funds going forward, as well.
The company’s shares fell drastically earlier this week after it revealed it would not be able to access all of a £20m financing facility provided by Wells Fargo. The company trades on the London Stock Exchange’s main board in spite of its small stature.
But the agreement has been a shot in the arm for Laura Ashley, rising its shares by 45 percent. Now the shares sit at 2.4p and have a value of £17.5m.
Laura Ashley is set to report half-year results Thursday, but it has already stated that sales have been down 11 percent since a year previous, which is a steeper fall than the 3.5 percent decline reported until June of last year, when the company lost £9.8m before taxes and exceptional items and repaid debt using the proceeds of property sales.
Laura Ashley has not paid a dividend since 2017.
The company operates 155 stores in the U.K. and is about to close around 40 of them under a rationalisation plan announced in 2018. There are another 80 units franchised overseas.
Other sales paths for the company have not fared so well, either, with around 22 concessions in Homebase stores closed in 2016 after the DIY group was acquired by Australian conglomerate Wesfarmers.
In the U.S., Wells Fargo has been in the process of trying to reorganize itself in the wake of scandal.
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