Shop Direct closes in on £150m financing deal

According to The Times, advisers to the Barclays have claimed that the deal is “all but done”.

The family are said to be close to agreeing terms on the financing package, which is likely to take the form of an equity injection from the Barclays. However, it is unclear how they have financed the deal.

Details of the potential cash injection have emerged despite volatile trading in Shop Direct’s bonds.

A pound’s worth of Shop Direct’s debt was yesterday valued at around 84p. Bond investors are seeking a return of 14% to lend to the etailer, which owns the Very and Littlewoods brands.

The price of Shop Direct’s bonds fell after it suffered a statutory pre-tax loss of £185.5m in the 52 weeks to June 30, 2019, despite a 1.8% increase in group revenue to £2bn.

A late surge in PPI claims ahead of the August 31 deadline caused its losses to spiral – and forced the business to seek additional funding.

Last month it was revealed that the Barclay family was considering selling Shop Direct as part of a review of its business portfolio. The family also owns The Daily Telegraph, The Ritz Hotel and delivery company Yodel.

Financial advisers are expected to seek buyers for a chunk of that stable, but it is understood that the Barclays have always wanted to retain a large stake in Shop Direct.

However, the etailer warned in its accounts last week that there was “material uncertainty” surrounding its ability to operate as a going concern because it had not yet secured the vital funding.

Shop Direct added that directors were looking at a number of options including “debt and equity funding” as it bids to get back on a firmer financial footing.

The Barclay family’s Jersey-based entities have been helping to prop up their UK businesses through a series of loans.

Aidan Barclay loaned £124.7m to the UK holding company that owns Shop Direct during the year ending June 2018.