The securities of City Chic Collective Limited will be placed in a trading halt at the request of the fashion business.
It comes pending a soon-to-be-made announcement regarding the outcome of a proposed divestment of its owned label Avenue, alongside an equity capital raising.
City Chic reported in a statement to the ASX that this will be undertaken by way of a both a fully underwritten institutional placement and pro-rata accelerated non-renounceable entitlement offer of new fully paid ordinary shares in City Chic.
“City Chic requests two consecutive 'back to back' trading halts of two trading days each, under section 2.3 of Guidance Note 16, for the purposes of executing the institutional component of the entitlement offer.
“City Chic considers the 'back to back' trading halts are necessary to ensure the institutional component of the Entitlement Offer is undertaken in an orderly manner, to assist City Chic in managing its disclosure obligations in relation to the Entitlement Offer, and to ensure that trading does not take place in an uninformed or disorderly market.
The plus size retailer then requested that the trading halt remain in place until either the released announcement regarding the offer or on the open of trading on Monday, June 24.
Unless the ASX decides otherwise, the securities will remain in trading halt until the commencement of normal trading on Monday, 24 June 2024.
The news follows a tough trading conditions for City Chic, which recorded a 75 per cent drop in net loss to $21 million for the first half of FY24. The company then announced it will undertake cost reduction and rightsizing initiatives.
City Chic also finished the half year with a net cash position of $3.5 million, driven up by the sale of its Europe, Middle East and Asia (EMEA) business in the recent half-year period, including its UK brand Evans as well as the sale of inventory in the region.
Losses attributable to the discontinued EMEA business of $3 million resulted in a loss after income tax expense for the recent half-year period attributable to the owners of City Chic Collective Limited of negative $24 million, down from $27.2 million in the prior corresponding period.
The proceeds from the sale of Evans have been used for working capital purposes and to pay down and cancel the group’s remaining $1.5 million acquisition facility.