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New Look may need to place itself up for sale to complete refinancing

Lauretta Roberts
24 January 2019

Young fashion chain New Look may be obliged to put itself up for sale in order to successfully complete its refinancing rescue deal.

According to a report in The Guardian, the company, which is currently trading under a CVA and is planning to hand over a 92% stake to bondholders to reduce its debt pile, “may be required to launch a sale process for the group in which other interested parties could participate”.

The report states that 90% of the company's bondholders have approved the refinancing deal, which involves an £80m short-term cash injection and the raising of a further £150m long-term debt as part of the debt-for-equity swap.

Experts say that before proceeding with the deal the company may need to demonstrate that it has found no preferable alternative to the refinancing – such as selling the business – to avoid any possible legal challenge from its creditors, in particular those holding £176m in unsecured bonds.

New Look operates around 500 stores and has been undertaking closures as part of its turnaround plan. Chairman Alistair McGeorge was drafted in to the business in November 2017 to turn around its fortunes.

He told The Guardian that the wide-spread approval of bondholders was a "vote of confidence" in its strategy and that the company aimed to have its refinance in place by April.

 

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