The challenge

In 2021, Myer was operating under a traditional financing facility with a structure that was no longer aligned to Myer’s aspirations.

To pave the way for growth, Myer sought a funding solution that would provide more flexibility to facilitate the continued execution of its Customer First Plan, whilst optimising its capital management strategies.

The solution

The company worked with J.P. Morgan and Gordon Brothers, who provided Myer with a AU$215m, four-year asset-based lending (ABL) facility. This facility successfully refinanced Myer’s existing credit to provide significant long-term liquidity to invest in growth opportunities, flexibility in paying dividends to its shareholders and efficiency in funding working capital requirements through seasonal trading periods.

The ABL solution uses a liquidity-based covenant threshold and provides Myer with a line of credit by valuing its inventory and brand – a departure from the conventional covenants widely used in Australia. The nature of the new covenant provides flexibility that allows Myer to focus on delivering greater customer and shareholder value, as well as investing in its growth strategy, including accelerating Myer’s online business and loyalty initiatives.

With this new ABL facility, Myer is well-positioned to execute its growth strategy across Australia. The company plans to continue investing its MYER one customer loyalty platform, leading online channel offer, and in technologies which drive efficiencies and excellent customer experience in store and in its fulfilment operations to capitalise on the ever-evolving retail landscape.

Best practice and innovation

Myer’s ABL solution demonstrates innovation in several key aspects, including setting a precedent as one of the largest retail ABLs in Australia, and makes Myer the first known publicly-listed Australian retail company to leverage its IP for liquidity purposes within an ABL structure. With flexibility to streamline its working capital cycle and meet seasonal operational needs, the ABL structure supported Myer to reinstate dividends to its shareholders for the first time in four years in 2022.

The innovative ABL funding solution meets Myer’s financing needs in an evolving retail market. This unique structure delivers flexibility to Myer as the borrower, allowing the company to optimise cash flow while ensuring operational adaptability.

The covenant structure provides Myer with the flexibility to pursue its growth strategy without compromising on financial stability, whilst the ABL structure can be flexed to align with Myer’s asset base and liquidity requirements.

Key benefits

• Flexibility.

• Process efficiencies.

• Future-proof solution.

“ABL facilities have been uncommon in the Australian retail industry to-date. However, the solution provided by J.P. Morgan and Gordon Brothers is well-suited for the seasonal nature of a retailer and provides flexibility in managing cash flow which is backed by an asset base.”

Nigel Chadwick, Chief Financial Officer