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AO World says one credit insurer cut its suppliers' cover in May

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FILE PHOTO: AO distribution centre in Crewe
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LONDON (Reuters) -British online retailer AO World said a third-party credit insurer serving some of its suppliers had "rebased" its cover in May to reflect post-COVID sales levels, but added that the move had had no effect on its liquidity.

Shares in the electricals seller fell as much as 19% on Monday after the Sunday Times reported it was facing a cash crunch after credit insurer Atradius slashed cover.

The stock, which has declined by more than 70% in the last 12 months, pared losses after it issued its statement, and were down 13% in afternoon deals.

AO World said last month it would close its struggling business in Germany because its prospects were deteriorating.

It said on Monday the total cost of the closure was expected to be towards the lower end of its original estimate of nil to 15 million pounds ($18.2 million).

AO World said it was taking further action to strengthen its balance sheet and was "optimising its focus" on profit and cash generation in the face of economic uncertainty in Britain and continuing challenges in the global supply chain.

The company also said it continued to have full access to its 80 million pound revolving credit facility.

($1 = 0.8227 pounds)

(Reporting by Paul Sandle, Editing by Kylie MacLellan and William James)

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