Retailers race to refinance £7bn of debt

Kasmira Jefford
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RETAILERS will struggle to refinance debts of as much as $11.2bn (£7bn) due for maturity at the end of this year, leaving some firms at the mercy of their lenders and putting others in danger of insolvency, an industry report has warned.

Some 46 UK based retailers hold bank debt totalling $50bn due for maturity between now and 2018 while 21 retailers face $22bn of retail bonds maturing over the same period, with $6.2bn due this year alone, according to law firm Freshfields Bruckhaus Deringer.

Just seven retailers account for more than 63 per cent of the debt.

“The UK retail sector continues to be affected by weak consumer confidence, tight credit, often inflexible lease terms, fierce competition and relatively high commodity prices”, Adam Gallagher, a partner at Freshfields said.

A number of retailers have been at loggerheads with landlords over the terms of their leases as tough trading conditions and costly rents put pressure on their cashflow.

Several major retailers, including New Look and Clinton Cards have been seeking to pay monthly rather than quarterly rents.

“The evidence we are seeing is reaching such an outcome is often fraught with difficulties” Gallagher said.