COMPREHENSIVE RECAPITALISATION SIGNIFICANTLY REDUCES LONG-TERM DEBT AND PROVIDES FINANCIAL STRENGTH AND FLEXIBILITY TO DELIVER A SUSTAINABLE PLATFORM FOR POST-COVID TRADING
New Look Retail Holdings Limited (“New Look” or the “Company”, and together with its subsidiaries, the “Group”) is pleased to announce that it has secured agreement with its financial creditors to the key terms of a comprehensive recapitalisation transaction (the “Transaction”).
The Transaction will extend New Look’s facilities, deliver a new money investment of £40m and significantly de-leverage the balance sheet.
Under the terms, New Look will have funding to provide a sustainable platform for post-COVID trading and enable the Group to invest in, and deliver, its strategic business plan.
The financial creditors have executed a lock-up agreement (the “Lock-Up Agreement”) pursuant to which they support the implementation of the Transaction.
The Transaction involves a number of inter-conditional components, including:
- A re-basing of the Group‘s UK leasehold obligations through a company voluntary arrangement (“CVA”) of New Look Retailers Limited (“NLRL”), the Group’s primary UK trading entity
- A debt for equity swap on New Look’s current debt, reducing senior debt from c. £550m to c.£100m, and significantly decreasing interest costs
- An extension of primary working capital facilities, which provide further financial support to the Group with no near-term maturities
- An injection of £40 million of new capital to support the business plan
Nigel Oddy, Chief Executive Officer, said: “As has been the case for many retailers, New Look’s financial position has been significantly impacted by COVID-19, and over the past five months we have had to take a number of tough but necessary decisions and actions to manage the impact this has had on our business and our people.
“As a result of taking decisive measures to preserve and maximise liquidity since the onset of the pandemic, we have maintained our cash position through the lockdown period, and this has also in part been helped by strong online trading.
“I am pleased that we have now safely reopened 459 stores. However, current trading remains impacted by the decline in footfall seen right across the retail market, and with the pandemic ongoing and social distancing measures in place for the foreseeable future, it remains difficult to accurately forecast the sales recovery rate.
“Given this, and the extent of our deferred obligations, future expected costs and the likely permanent structural shift in customer spend and behaviour from physical retail to online, we are seeking additional capital for the business and a recapitalisation of our balance sheet to ensure we are as well positioned as we can be going forward in the post-COVID-19 retail operating environment. Additionally, out of absolute necessity, we are preparing to launch a CVA that would reset our rental cost base back to market rent through a turnover-based model that fairly reflects the future performance of the Company and wider retail market.
“We are pleased to have already gained backing from our banks and bondholders for our recapitalisation, and we are grateful for their support and the concessions they have made over recent times. However, this recapitalisation - which will enable us to deliver our long-term strategic plans and safeguard 12,000 jobs - can only be delivered if we secure the support of our landlords for our forthcoming CVA.
“New Look is a brand that has inspired tremendous loyalty over the past 50 years and has earned its place as one of the UK’s leading womenswear retailers. We are confident in our plans to build on these strong foundations with our revitalised broad appeal product ranges, and this transaction will allow us to secure our future for the benefit of all stakeholders as we navigate the post-COVID-19 landscape.”
Full terms of the proposed transaction and an operational update can be found below.
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