Laura Ashley saved from closure with £20m loan

Cash from US bank Wells Fargo sees Laura Ashley shares recouping some of the losses incurred earlier in the week

Laura Ashley shares have bounced back after announcing it has secured a £20m loan with US bank Wells Fargo.

The news comes two days after the company revealed its main shareholder, the Malaysian investment firm MUI Asia, was in make-or-break talks with the bank, following a steep drop in sales.

“The group should be able to utilise requisite funds from its working capital facility with Wells Fargo to meet its immediate funding requirements,” Laura Ashley said.

The cash injection has saved the clothing and furnishing retailer from imminent collapse, following a nightmare year. In August the business announced a £14m loss in the year to 30 June, compared with a £100,000 profit the year before.

Months earlier private investor Flacks Group dropped a potential £20 million bid for the company after Laura Ashley’s board rejected its advances.

Nick Burchett, a fund manager at Cavendish Asset Management, which is Laura Ashley’s third-largest shareholder, said in the Guardian that while the deal with Wells Fargo is “good news for the company in the short term, it might not hold up for long”.

Following the announcement of the loan, Laura Ashley’s shares regained some of the losses incurred earlier in the week, rising 15 per cent to 1.9p. However, they are still well below Friday’s closing price of 3.25p, before the talks were revealed.

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