ASOS Shares Plummet Amidst Loan Covenant Renegotiation Talks
Troubled Fast-Fashion Retailer Faces Uncertain Future
Shares Tank as ASOS Confirms Discussions
London, UK - October 17, 2022 - Shares of British online fashion retailer ASOS (ASOSL) took a sharp dive on Monday after the company confirmed it was in talks with lenders over changing the terms of a £350 million ($394 million) borrowing facility.
The announcement sent shockwaves through the retail sector, with ASOS shares plunging more than 30% in early trading. The decline wiped out nearly £1 billion ($1.12 billion) from the company's market capitalization.
ASOS said it was in "discussions with its lending banks to amend the terms of its existing 350 million pound borrowing facility." The company did not provide any further details about the proposed changes, but it said it would provide an update "in due course."
The news has raised concerns about ASOS's financial health. The company has been struggling with rising costs and a slowdown in consumer spending in recent months. In August, ASOS warned that it expected its full-year profit to be "significantly below" previous expectations.
Analysts say that the talks with lenders could be a sign that ASOS is facing a liquidity crisis. "This is a very worrying development for ASOS," said one analyst. "It suggests that the company is struggling to meet its financial obligations and may need to seek additional funding."
ASOS has not commented on the speculation about its financial health. The company's largest shareholder, Anders Holch Povlsen, has reportedly been approached by lenders about providing additional funding, but it is not clear if he will agree to do so.
The uncertainty surrounding ASOS's financial future has led to a sell-off in the company's shares. Analysts say that the stock could continue to decline in the coming weeks as investors wait for more news about the talks with lenders.
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