sunday times7 Mar 2021 00:19
Card Factory has called in restructuring experts from Deloitte to help raise fresh funds to see the retailer through the pandemic. Consultants from Deloitte are understood to have approached specialist lenders asking to borrow £100 million, half of which would be used to repay Card Factory’s existing debts. After those discussions ended without agreement, Card Factory entered talks with its existing lenders — HSBC, NatWest, Santander and Lloyds — over new financing arrangements. Card Factory’s banks agreed to waive covenants on its £200 million revolving credit facility in January and again in February. A source close to the company said discussions with the banks were positive.
In 24 years, Card Factory has grown from a single shop in Wakefield, West Yorkshire, to a chain of more than 1,000 stores across the UK and Ireland. The lockdown spanning Christmas and Mother’s Day has been hugely damaging for the business, which makes almost all of its sales in stores. Sales in the 11 months to the end of December dropped by a third to £281.4 million.
The closure of card shops was a boon for online rival Moonpig, which floated on the stock market last month at a £1.2 billion valuation.
Costs incurred by Card Factory and other non-essential retailers will start ratcheting back up when they reopen their shops on April 12, with little visibility on the level of demand. Distressed debt investors are said to be circling Card Factory, which reported underlying pre-tax profits of £65.8 million on sales of £451.5 million in the year before the pandemic.
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