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Monday, 16 April 2012

Retailers need to refinance £7bn debt in 2012

In a report by Freshfields Bruckhaus Deringer, they highlighted the fact that the UK's retailers have £7bn of  bank syndicated debt and bonds that need to be refinanced by the end of the year.  46 UK based retailers hold bank debt worth a combined £31bn due for maturity between now and 2018.  However, most interestingly just seven retailers account for 63% of this debt

Retailing is a difficult sector at the moment for obvious reasons so this high level of debt is of some concern as it may be more expensive to refinance if the investors lose more confidence in the sector.  High profile collapses such as Game Group and Peacocks has not helped confidence. 

With lease costs being the highest fixed cost for any retailer the lenders are looking to the landlords to take on some of burden to help avoid insolvency.  This may take the form of the landlords having to accept monthly rent payments.  Clinton cards has reportedly struck a deal with their landlords to do exactly that.  In more extreme situations a CVA or administration may be the only way to rid the companies of their unprofitable stores.

For information on how to help your retail business determine lease obligations then look at our retailer rescue page.

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Many thanks for your comments. If you have a private business problem and you want advice give us a call on 0800 9700 539 or email me at keiths@companyrescue.co.uk. If you are a professional advisor with a troubled client, please suggest they visit www.companyrescue.co.uk or contact me as above.

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