By Geoffrey Smith

Investing.com -- Shares in Superdry (LON:SDRY) failed to hold on to initial gains at the start of London trading on Monday after the U.K. fashion group confirmed weekend press reports that it is in talks with a hedge fund backed by Elliott Management to refinance a crucial £70 million (£1=$1.2074) debt facility.

The group said in a statement to the stock exchange that it "is in negotiations with Bantry Bay Capital Limited, the specialist lending provider, to replace the existing up to £70m asset-backed lending facility."

It added that "there can be no certainty that an agreement will be reached, nor as to the terms of any such agreement and we remain in discussions with other lenders. A further announcement will be made as and when appropriate."

Superdry is one of many U.K. retailers struggling to survive at a time when double-digit inflation and economic contraction are taking a heavy toll on consumer spending. The group had warned in October of "a material uncertainty" around its ability to keep trading if it failed to refinance the ABLF, which is due to expire in January.

The key holiday season has started in a subdued fashion, according to anecdotal reports, despite a modest improvement in consumer sentiment as a wave of political and financial market turmoil recedes.

By 03:15 ET (08:15 GMT), Superdry stock was up only 0.5%, having opened some 5% higher on the news.

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