Pumpkin Patch shares biggest faller on NZX

Thursday 20 October 2016 03:52 PM

Pumpkin Patch shares biggest faller on NZX as board mulls capital constraints

By Edwin Mitson

Oct. 20 (BusinessDesk) - Pumpkin Patch shares were the biggest decliner on the NZX today as the deadline looms today for directors to propose measures to address its capital constraints with lender ANZ Bank New Zealand.

In its full-year results published last month, the Auckland-based childrenswear retailer told investors that its directors had given an undertaking to the bank that it would put forward proposals by Oct 20.

The capital constraints were highlighted in the accounts as a "material risk" to the ongoing viability of the business.

Its debt to ANZ rose to $46 million from $39.1 million in the year to the end of July 2016. It posted a loss of $15.5 million in the same period.

The directors said the 2016 financial year was the first in a four-year turnaround plan, and "very good progress has been achieved, although this is not immediately apparent from the headline numbers reported." The decline in sales was put down to the fall in its international wholesale business and online channels in the northern hemisphere, which have historically delivered profits.

The directors warned that the business remains over-leveraged and capital constrained, with "our ability to move forward impacted by the lack of available capital for debt reduction and reinvestment." The board's primary focus was described as assessing what options are "realistically available" to address its position.

Shares fell 16.6 percent or 1.2 cents to 6 cents in trading on Thursday. Shares have fallen 43.3 percent since the start of the year.

(BusinessDesk)

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