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(Alliance News) - Card Factory PLC on Friday said it has secured a one-month extension to negotiate with lenders to avoid breaching banking covenants on a GBP200 million loan.
In mid-January, the greetings card retailer had warned its "existing bank facilities of GBP200 million would be sufficient to meet the current requirements".
But on Friday, it said: "We are pleased to announce that our banking syndicate has provided waivers in respect of anticipated covenant breaches through until February 28, 2021 taking account of the company's cash flow projections, subject to certain conditions.
"We remain in constructive discussions with our banks, and have agreed a process to continue to explore a range of potential solutions, with scope for further extensions to the waivers as this process continues."
Earlier this month, the retailer revealed that sales fell by 38% after its stores were forced to shut completely for 37% of potential trading days because of coronavirus lockdowns.
It expects revenue for its financial year ending January 31 of around GBP234 million and a pretax loss around GBP10 million, a steep deterioration from revenue of GBP451.5 million and pretax profit of GBP65 million in financial 2020.
Card Factory's online business performed "strongly", with more than double like-for-like sales, while its trade sales grew by 63%.
Card Factory's announcement came less than 24 hours after rival card-seller Paperchase secured a rescue deal which will save around 1,000 jobs and the majority of stores, after having fallen into administration. However, Paperchase said 37 of its 127 stores will shut their doors permanently despite the move.
Administrators revealed that newly formed company Aspen Phoenix Newco, which is backed by Permira Debt Managers, is to take control of the high street retailer.
Meanwhile, online competitor Moonpig is gearing up for a stock market listing later this year in a move expected to value it at more than GBP1 billion, having posted a 135% sales jump in the six months to October as the pandemic drove more customers online.
Shares in Card Factory were down 0.8% in London on Friday mid-morning at 35.71 pence each.
By Paul McGowan; paulmcgowan@alliancenews.com
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