Ethel Austin closes in on refinancing deal

The discount fashion retailer Ethel Austin hopes to complete a refinancing deal to safeguard its future, as its suppliers complain about not having received payments due before Christmas.

The 300-store chain is understood to be in advanced negotiations with an unnamed investor and hopes to tie up a refinancing deal that it will use to inject working capital into the business.

Elaine McPherson, who bought Ethel Austin out of administration in 2008 for an undisclosed sum, is understood to have injected £5.5m into the business, based in Knowsley, Merseyside, before Christmas. Since it went administration, Ethel Austin's suppliers have been unable to obtain trade credit insurance.

It is understood that some of Ethel Austin's suppliers have not received payments for pre-Christmas bills and are getting nervous about the retailer, which was founded by Mrs Ethel Austin in the front room of her home in Liverpool in 1934. However, sources said the retailer remained on the expansion trail, after opening between 30 and 40 branches in the past few months, and vehemently denied that it was in trouble.

At about the time of her acquisition of Ethel Austin, Ms McPherson, a former executive of discount fashion chain MK One, also bought the homewares retailer Au Naturale out of administration in 2008. Sources said the shops that had been converted to sell both chains' products were performing well. Executives at Ethel Austin was unable to comment yesterday.

Other stores refinancing so far in the new year include the parent of American Golf Discount Centre, the 78-store golf equipment chain, which completed a "successful restructuring" this month, according to its annual report, which was filed at Companies House last week.

Royal Bank of Scotland has taken a 29.5 per cent stake in the company in a debt-for-equity swap.