Unbound tumbles as fundraising deal collapses

Hotter shoes owner Unbound tumbled on Wednesday as it said that a funding deal had collapsed and reported a deterioration in trading conditions.

Last month, Marwyn Investment Management said it would provide a £10m investment via an equity placing at an issue price of 10.5p per share. However, Unbound said that Marwyn informed it on Tuesday that it was withdrawing its funding proposal, "citing principally concerns over current trading".

As a result, discussions regarding the fundraise have been terminated with immediate effect.

Updating on trading, Unbound said the environment has remained challenging over the first quarter, with conditions worsening versus those outlined in the FY23 trading update in January.

"This has resulted in Q1 revenues being lower than the board previously anticipated, offset by the board's previously notified cost reduction programme, which is on-track to deliver £2.3m of annualised savings from the group's current operating model by the third quarter of FY24," it said.

"As such, as a result of these actions, the board anticipates that profitability for Q1 is expected to be broadly in-line with its previous expectations. The board is also well advanced in conducting a wider review of the operating structure of the group in order to drive growth of revenue and profits over the medium term."

Unbound also said it will likely require further covenant waivers in the short-term and will continue with its "constructive dialogue" with banking partners as it looks to raise additional funding or refinance existing borrowing facilities.

At midday, the shares were down 56% at 3.22p.

Russ Mould, investment director at AJ Bell, said: "The owner of the Hotter footwear chain has been an unmitigated disaster for investors since being demerged from Electra Private Equity.

"Trading conditions have been tough for the business and this has spooked Marwyn Investment Management which had been planning to buy £10 million of new shares. It's now pulled out, leaving Unbound to look at alternative options to strengthen its balance sheet."