Yahoo Finance Coronavirus: Sofa maker DFS to raise at least £60m in debt for crisis
Sofa maker DFS (DFS.L) said on Monday that it was in “advanced” negotiations with its existing banks to secure an additional credit line of between £60m ($73.6m) and £70m so that it can weather the coronavirus pandemic.
The new debt will supplement an existing £250m facility and will bolster its working capital until sofa deliveries can resume, the UK’s largest furniture retailer said.
DFS, which was forced to close all of its stores in March, also said that it was hoping to raise further money from investors via an equity issue of up to 19.9% of its existing share capital.
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The company said it had made “further progress” on cost reductions, noting that its monthly outgoings were expected to be £14m lower than usual until its showrooms and manufacturing and distribution facilities re-open.
It was able to make such reductions following “positive discussions” with suppliers and landlords, as well by using government support, DFS said.
In March, the sofa maker froze recruitment and said that senior directors would take a pay cut. All annual salary reviews and several showroom openings were postponed, and the company also canceled dividend payments to shareholders.
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The new financing and cost-reduction measures will give DFS “significant liquidity” to see through an extended lock-down, DFS said on Monday, noting that it was “confident” that the group can navigate the crisis and deliver its long-term strategy once the trading environment “normalises.”
DFS said that online sales had increased by more than 20% since it was forced to close its stores.
The company said that it hoped to restart deliveries once two-person sofa installations in people’s homes became “safe and workable.”
DFS warehouses continue to receive inbound deliveries from manufacturers in Asia, the company said, noting that it had put in place measures so that its warehouses could continue to operate.
