Truworths revamps UK debt
Truworths International’s struggling UK business is out of the woods, for now, having successfully restructured its debt. The JSE-listed group said on Thursday that Standard Bank, its principal SA banker, would provide a £32.5m (about R600m) facility to refinance its Office footwear retailing business in the UK.
Truworths International’s struggling UK business is out of the woods, for now, having successfully restructured its debt.
The JSE-listed group said that Standard Bank, its principal SA banker, would provide a £32.5m (about R600m) facility to refinance its Office footwear retailing business in the UK.
Office’s borrowings totalled £42.5m at its financial year end in June 2019. In early July the group announced that it had entered into discussions with UK lenders regarding potential debt restructuring options.
Group CEO Michael Mark said the funding has been obtained at more favourable rates than the existing facility, based on the strength of the group’s balance sheet, and is secured by a guarantee issued jointly by Truworths International and Truworths.
Office has also used existing cash reserves of £10.5m, which were surplus to operating requirements, to settle the balance of the existing sterlingdenominated debt.
All transactions were implemented by September 24 2019.
“Based on Office’s profitability, liquidity and cash position, as well as the successful completion of the debt restructuring, the board wishes to advise stakeholders that no major financial restructuring of Office is being considered,” said Mark.
The group said retail trading conditions in the UK have been severely affected by uncertainty over Brexit and muted consumer confidence, contributing to a sharp decline in Office’s profitability. Truworths warned that trading conditions for UK retailers remain challenging ahead of the October 31 Brexit deadline.
The board has, however, advised that management continues with the turnaround of the Office business “and early indications are that the business has been suitably stabilised”.
Office faces the challenge of balancing online versus physical store sales while being bound by long-term legacy leases.
Management is now critically evaluating the real estate portfolio and plans to close poorly performing stores as soon as it is able to do so.
“The management of Office is now focused on driving profitable growth by improving staff morale, investing in customer and brand relationships, and improving merchandise processes,” said Mark,
“We continue to enhance the e-commerce offering to grow sales in an environment trending towards online shopping.”