Struggling Somerset leather firm looking to raise funds to ease credit issues
A luxury leather goods firm has announced it is looking to raise £255,000 as it struggles to cope with the challenging economic environment.
Historic Somerset firm Pittards says it has been operating at or around the ceiling of its banking facilities in recent months.
The issue has come about as as a result of significant adverse foreign currency movements, resulting from the weakening pound sterling.
Pittards says it has been managing its working capital carefully in anticipation of agreeing new and potentially restructured bank facilities.
However, this process is taking longer than originally expected and in order to complete this process additional working capital is now required.
As a result the company is to raise £255,000 along with directors’ loans of £85,000 through a share placing.
The directors and certain other employees have agreed to make interest free loans to the company amounting in aggregate to £85,000.
Lloyds Bank has confirmed, subject to documentation, its intention to increase the company’s borrowing facilities by £340,000 and to extend the Company’s existing banking facilities until the end of June.
The Directors estimate that the proceeds of the Placing, Directors’ Loans and the increase in borrowing facility should enable the Company to continue to manage its working capital until at least the end of May.
Depending on the size and structure of the new facilities further equity or debt may also be required to provide some funding for growth and fully return the company’s creditors to a normal profile.
The directors’ estimate that this additional requirement is likely to be up to £3 million.
The pacing which is being conducted by WH Ireland comprises the placing of 1,020,000 new ordinary shares.