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In a statement on Thursday, Truworths [JSE: TRU] said that it has successfully concluded an agreement with Standard Bank to provide a pound-denominated loan of £32.5 million (around R600m) to refinance its struggling UK shoe retailer Office.
“The board advises that the funding has been obtained on favourable commercial terms based on the strength of the Group’s balance sheet, and is secured by a guarantee furnished by the Truworths operations in South Africa,” Truworths said.
The loan of £32.5 million, together with £10.5 million of Office’s existing cash reserves, will be used to settle its existing pound-denominated debt of £43 million. Earlier, Truworths said that a large part of the debt was due next year.
Truworths warned that trading conditions for UK retailers remain challenging amid uncertainty ahead of the end-October 2019 Brexit deadline.
“The board advises however, that management continues with the implementation of the turnaround and alignment initiatives in the Office business and early indications are that the business has been suitably stabilised.”
Truworths bought Office for £154m in 2015, but last month wrote down £97m of its value as the retailer continued to struggle in a tough UK market.
