Weekend reports said ScS has appointed Ernst & Young to advise on a financial restructure to raise cash in an attempt to safeguard its future. In a statement this morning, ScS said the challenging retail conditions have had a negative impact on the furniture sector.
ScS said: “Despite the previously announced downturn in sales, ScS’s conservative financing structure was considered appropriate for prevailing trading conditions. However, the unexpected and sudden withdrawal of credit insurance from the market, which has impacted us and other retailers, has placed a strain on the working capital needs of our suppliers.
“We continue to trade with all our suppliers with whom we have a symbiotic relationship and we are working to address their – and therefore our – working capital requirements.”
Land of Leather said this morning that it expects to finalise an underwritten sale of equity this week. The retailer said it has received indications of support for the equity fundraising from shareholders, including its directors, who together hold 50 per cent of its issued share capital.
Land of Leather added: “While Land of Leather expects that it will be able to complete such a fundraising, there can be no certainty that any such fundraising will be announced.”
The announcements follow reports in The Sunday Times that KPMG had been lined up as administrator for ScS if a restructure fails and that Land of Leather is nearing a rescue package.
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