Asos raises funds as it seeks turnaround after £291m loss

theguardian.com:

Asos is raising £80m from shareholders and borrowing £275m from Bantry Bay Capital, the specialist lender which recently bailed out troubled retailers Superdry and Matalan, as it struggles to secure a turnaround after falling nearly £300m into the red.

The online fashion specialist said it had raised the funds to give it the “financial headroom” to improve shoppers’ experience and return to profitability within a year by simplifying its processes, cutting costs and becoming more innovative.

On Friday, the company said it had already secured £75m in new funding from institutional shareholders led by major investors – the Danish fashion entrepreneur Anders Povlsen’s Bestseller group and US hedge fund Camelot Capital Partners.

A further £5m in new shares will be offered to smaller investors with the two share placings equivalent to a fifth of Asos’s share capital.

Analysts from Peel Hunt said the £275m borrowed from Bantry Bay, a firm backed by the hedge fund Elliott Advisors, under a three-year deal gave Asos more flexibility than the £350m facility it replaced and the ability to “push on with its recovery strategy without dancing around its bankers every few months”.

However, the facility comes with a high 11% interest charge and analysts at Liberum said there was still a high risk that Asos’s turnaround plan would not be successful and it would be forced to refinance again.

“There still remains a worst-case scenario that further financing may be needed to replace the £500m convertibles in 2026,” Liberum analyst, Anubhav Malhotra, wrote in a note.

Shares in Asos were down 2% on Friday.

The fundraising comes after the online fashion retailer revealed this month it had made a loss of £291m in the six months to 28 February after