New Look urges landlords to accept CVA after failing to find buyer

Fashion retailer New Look has increased pressure on landlords to accept a restructuring deal, after failing to attract a buyer. The company said that while there had been some interests in certain of its assets, no bid was received.

After not finding a buyer or alternative investor, the company’s hedge fund owners Brait are seeking to enter a company voluntary arrangement (CVA), which would see its 496 UK stores move to turnover-based rents. The company had previously warned, in June, that it might launch a pre-pack administration if landlords did not agree to turnover-based rents.

If this deal is agreed, the owners have said that they will invest £40 million in New Look through a debt-for-equity swap. The capital injection is part of a recapitalisation that New Look has agreed with banks and bondholders, which also includes a debt-for-equity-swap that would cut its debt from £550 million to £100 million.

The recapitalisation would also decrease interest costs and secure an extension of working capital. New Look’s Chief Executive Nigel Oddy has said that the recapitalisation “can only be delivered if we secure the support of our landlords for our forthcoming CVA”. The company has said that the CVA is an “absolute necessity” if it is to safeguard its 11,200 jobs.

However, it is thought that around a dozen of New Look’s landlords are resisting the CVA, which would be the company’s second in three years.

In a statement the company said: “If unsecured creditors do not support the company’s CVA, the directors of the company will have to consider less favourable alternatives than the current transaction for the Group’s stakeholders including its creditors (including those unsecured creditors), customers and employees”.

A vote on the deal will be held on September 15 and requires 75 per cent backing from creditors in order to pass. It is understood that more than half of New Look’s 350 landlords will need to back the deal.

The company has seen its problems exacerbated by the COVID-19 pandemic, with stores forced to close for months during lockdown and shopper numbers down 40 per cent on last year’s levels since stores were allowed to reopen.


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