ASOS PLC (LSE:ASC) shares rose 3% to 237p on Thursday after the online fashion retailer unveiled a refinancing deal that cuts interest costs, boosts liquidity and extends its debt maturity to 2030.
The company said the move marks another step in strengthening its balance sheet as it heads into the last phase of a multi-year turnaround programme.
The new structure replaces the existing asset-backed loan with a secured term loan and a delayed-draw term loan provided by a syndicate of private lenders.
ASOS said the package offers “materially improved” financial terms, including £87.5 million of additional liquidity headroom and a like-for-like reduction of about £5 million in annual cash interest compared with the previous Bantry Bay arrangement.
Management argues that the improved terms reflect the progress made in stabilising the business.
Over the past two years, ASOS has been working to cut excess stock, simplify operations and improve profitability after a period of intense cost pressures and shifting consumer demand.
The company said the new financing gives it the resilience and flexibility needed to refocus on customer acquisition and growth.
Aaron Izzard, chief financial officer, said: “I'm pleased to announce the further strengthening of our balance sheet and financial flexibility through this strategic refinancing.
"As well as offering improved financial terms, it better positions us to deliver on the final phase of our turnaround strategy and growth plans with greater confidence and resilience.”
"The more attractive financing package reflects the underlying improvements, as well as via the Topshop deal and convertible bond refinancing," said Deutsche Bank, reiterating its 'buy' recommendation.
"ASOS is currently in a broadly breakeven cashflow position for FY25, but this will give even more flexibility to complete the turnaround strategy."