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Laura Ashley agrees emergency funding deal with Wells Fargo – The Guardian, Theguardian.com

Laura Ashley agrees emergency funding deal with Wells Fargo – The Guardian, Theguardian.com

British retailer secures vital £ m loan agreement with US bank as it fights for survival

() Laura Ashley’s shares rose after it agreed the terms of a £ 25 m loan facility with Wells Fargo. Photograph: Ian Tuttle / Rex / Shutterstock

Laura Ashley has staved off the (threat of imminent collapse) after securing access to sufficient funds to meet its immediate funding needs.

The clothing and furnishing retailer said talks with the US bank (Wells Fargo) over the terms of a £ 25 m loan facility had successfully completed.

“The group should be able to utilize requisite funds from its working capital facility with Wells Fargo to meet its immediate funding requirements,” Laura Ashley said.

It comes two days after the business announced its main shareholder, the Malaysian investment firm MUI Asia, was in last-ditch talks with Wells Fargo over the business’s future.

The retailer revealed the talks after reports appeared in the press over the weekend, but on Monday it denied claims that MUI Asia would put money into the business to help it stay afloat. It had been unable to access some of the funds after restrictions on the £ 25 m loan arrangement kicked in.

On Wednesday the company reiterated that MUI was not putting up any cash. “As previously announced, this is not a cash injection by MUI Asia Ltd into the group,” it said.

Its shares clawed back some of the losses they had incurred earlier in the week, rising 25% to 1.9p on Wednesday. However, they are still well below Friday’s closing price of 3. 34 p, before the talks were revealed.

The breakthrough comes after a difficult year for the retailer, which has 2, (employees and 480 stores. In August the business announced it had swung to a £ 17 m loss in the year to (June, compared with a £) , profit the year before.

Months earlier, Flacks Group dropped a potential £ 25 m bid for the company after Laura Ashley’s board rejected its advances. The Manchester-based private investor did not reveal why it had retreated approximately a month after expressing its interest.

Laura Ashley said the offer, which valued the business at 2. 82 p per share, did not reflect the value of the brand.

However, Cavendish Asset Management, Laura Ashley’s third-largest shareholder with a 1.7% stake, raised concerns about the Wells Fargo deal. “It’s good news for the company in the short term but it might not hold up for long,” said Nick Burchett, a fund manager at Cavendish.

He said the company needed to focus on its vintage styles and luxury image now it had breathing room, “otherwise it could be curtains for another well-known high street name”.

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