British high street retailer Laura Ashley has rebounded from two days of struggle as the business won permission to use a loan to fund its daily operations.
The business said talks with lender Wells Fargo over the terms of a £20 million loan had concluded.
“The group should be able to utilise requisite funds from its working capital facility with Wells Fargo to meet its immediate funding requirements,” Laura Ashley said in a statement to the stock exchange.
It comes two days after the business announced its main shareholder, MUI Asia, was in last-ditch talks with Wells Fargo over the business’s future.
£14 million Laura Ashley’s loss in its last financial year
Laura Ashley 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 £20 million loan arrangement kicked in.
Today it again stressed that MUI was not coughing up any cash: “As previously announced, this is not a cash injection by MUI Asia Ltd into the group.”
The business’s shares clawed back some of the losses they had racked up earlier in the week, rising by 0.35p to 2p, a 21% increase.
However, it is still well below the company’s closing price of 3.25p on Friday, before the talks were revealed.
It comes after a nightmare year for the struggling retailer.
In August the business announced it had swung to a £14 million loss in the year to 30 June, compared with a £100,000 profit the year before.
Months earlier Flacks Group, a private investor based in Manchester, dropped a potential £20 million bid for the company after Laura Ashley’s board rejected its advances.
The investor did not reveal why it had backed away around a month after revealing its interest. Laura Ashley said the offer did not “reflect the value of the Laura Ashley brand”. It valued the business at 2.748p per share.