DFS directors join shareholders to raise £64m to support the firm through the crisis

The Doncaster-based firm said it has also received credit approval for a new 12-month bank facility of £70m from its existing lending banks.

DFS directors showed their allegiance to the company by joining in the share placing.

DFS chief executive Tim Stacey bought more than 15,000 shares alongside a further six other directors and managers who took part in it.

The firm said the cash will strengthen the group’s balance sheet beyond its existing bank facilities of £250m.

Mr Stacey said: “The mitigating actions we have taken in response to Covid-19, alongside the new financing arrangements and placing, significantly increases the financial resilience of DFS for the months ahead.

“Alongside these actions, we also greatly appreciate the support and efforts from our loyal employees, committed suppliers and understanding landlords.

“Working together, we have made as much progress as possible to navigate these challenging times. While the outlook remains uncertain, DFS is well placed to navigate the coming months and the board remains positive about the long-term prospects of the group.”

The shares were issued at 150p, a premium of 16 per cent on the closing price on April 22.

Analyst Greg Lawless at Shore Capital said: “The outlook statement from DFS highlights the level of uncertainty given that the duration of the lockdown period is unknown, at this stage.

“The company has responded well, in our view, with a cost saving programme to mitigate the cash burn in the business and put additional financing in place to strengthen the balance sheet, so DFS can, to us, weather the current storm.”

Mr Lawless noted that the DFS management team is confident it can navigate the current uncertainty and be a more efficient business when the company becomes operational again.

“In our view, DFS has responded swiftly to put in place the required additional financing (extending the debt and placing new shares) in order to navigate the current crisis,” he said.

“We also believe that the cost and additional financing actions taken increase the financial resilience of DFS for the coming months. Hence, amidst a sad retail trading landscape full of casualties, we foresee DFS being a demonstrable survivor.”

Analyst Jonathan Pritchard at Peel Hunt said: “The straightforwardness of the equity raise shows what high esteem DFS is held in, and rightly so.

“This is a market leader with a strong record of moving away from crises with higher market share than it went in. All stores, of course, remain closed and our forecasts remain exceptionally cautious, but that is probably the way to be, given the uncertainty.

“Maybe as the clouds part forecast momentum can emerge. The shares are excellent value but it seems the market is grasping that.”

Mr Pritchard said DFS has been hard at work despite the stores being closed and the online operation has seen strong growth.