By Oliver Griffin
Debenhams PLC has agreed with existing lenders and note holders to additional 12-month loan in the amount of 40 million pounds ($51.6 million) and has agreed to form a strategic sourcing partnership with Li & Fung Ltd. (0494.HK), it said Tuesday.
In January, Debenhams said it was in talks with lenders to refinance its existing bank loans after warning that margins in the first half of the year will show some erosion due to promotional activity.
The new loan contains provisions for a step-up in pricing in the second quarter of the calendar year, Debenhams said. The loan will act as a bridge to ease broader refinancing and recapitalization.
Further updates will be made in due course, Debenhams said.
The U.K. department store chain said it has in principle entered an agreement with Li & Fung to develop a strategic sourcing partnership that will cover its own-brand sourcing.
The partnership will deliver improved product quality and lead times as well as higher margins, Debenhams said.
Initial orders under the agreement are expected to begin shortly, it said.
Write to Oliver Griffin at email@example.com; @OliGGriffin