Marks & Spencer has struck a deal with its lenders to “relax or remove” covenants on a £1.1bn credit line for tests due between now and the end of next year.
The retailer said it has also qualified as an eligible seller for the UK government’s Covid Corporate Financing Facility, under which the Bank of England will buy its short-term debt. The two moves will help it ensure it has sufficient liquidity during the continuing coronavirus crisis, M&S added.
M&S said it had reached “formal agreement” with a syndicate of banks to “substantially relax or remove covenant conditions for the tests arising in September 2020, March 2021 and September 2021.
“The agreement with the banks combined with other measures we have taken means that under our base planning scenarios and even more adverse assumptions, the business would have significant undrawn credit available for the 18 months ahead.”
The company expects its clothing and home business to be “severely constrained” as the UK lockdown continues and to face “highly uncertain trading conditions in a prolonged exit period”. Its food business has been “adversely affected” by the closure of cafes, it added.
M&S will also save roughly £210m by cancelling its dividend. The company said it would update the market on cost-saving measures in its full-year results on 20 May.
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