Shares in Unbound Group PLC (AIM:UBG) tanked 56% to 3.22p after the retailer said trading worsened in the first quarter, leading Marwyn Investment Management to pull out of a potential funding deal.
It said it may require renewed waivers from its lenders over its banking covenants.
Last month, Marwyn had proposed a £10mln equity investment, but yesterday informed the owner of Hotter Shoes it was backing out.
Marwyn's reason was its concerns over current trading, which Unbound said had "remained challenging" since the start of the year, indeed with "conditions worsening" compared to its January update.
In a separate statement, Marwyn said it had received "revised historical and forecast financial information from Unbound's management [and] as a result of that revised information, it terminated discussions with Unbound in relation to a potential investment".
Unbound said it is also "well advanced" in conducting a wider review of the group but is primarily focused on managing cash flows and "will continue with its constructive dialogue with its banking partners".