Boohoo loan extension rejected amid falling sales

A select group of lenders have rejected an attempt by online fashion retailer Boohoo (LSE: BOO) to extend the repayment deadline on £75 million of its £325 million debt, reports The Telegraph.

This comes as the fast fashion company faces tumbling sales and a 90% share price drop from its pandemic peak. Bohoo shares were down 3.2% at 35.21 pence by 09:30 GMT on Thursday morning.

Boohoo confirmed that six major banks, including leading household names, had agreed to push back the repayment date to March 2026 for £250 million of the borrowing. However, an unnamed leading Italian bank and other lenders declined to provide Boohoo with another year to pay back the remaining £75 million, which will need to be repaid by March 2025 as originally scheduled.

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The fashion retailer continues to face multiple pressures, including rising competition from chinese fashion retailer Shein and inflationary pressures on its supply chain. Boohoo issued a trading update last month stating that performance remains in line with expectations, but it has forecast up to a 17% revenue decline for the full year.

With Boohoo scheduled to deliver full year results in May, extending repayment on the majority of its debt was seen as crucial in providing auditors certainty that financing would be in place for at least the next 12 months. Despite the loan rejection, Boohoo stated it “remains a strong, well-capitalised business with ample surplus liquidity.”