New Look receives no bids as it prepares for a CVA

New Look

New Look has said that no bids were received following its exercise to solicit potential interest in the young fashion chain as part of its ongoing strategic review.

The company said that it had received some interest from potential buyers but none had led to a formal bid being made.

New Look will now continue to pursue its planned CVA which will be put to a vote on 15 September and which will enable a £40m new cash investment in the chain.

It is seeking to switch the majority of its store estate (402 stores) to turnover-based rents with a further 68 stores to pay zero rent.

Upon completion of the deal, should it be successful, the company said it would lead to the following benefits:

  • Materially reduce its long-term debt at the operating companies from c.£550m to £100m of bank facilities with an extended tenor to 2024
  • Provide access to an operating facility of £70m to provide supplier and other working capital financing with an extended tenor to 2023
  • Remove the existing bonds of £440m in consideration for equity and a small shareholder loan which will have no cash debt service costs, leaving New Look’s cash interest burden substantially reduced by more than £30m per annum, and no bond debt at the operating entities including New Look Retailers Limited
  • Obtain a new cash investment of £40m into New Look to invest in the business and assist in fulfilling its long term strategy

The company said it had received “overwhelming support” for the proposal from its secured financial creditors for the plan but it will be crucial for the chain to convince landlords to provide support. If it fails the business will have to consider “less favourable” options, it said.

More than 75% of unsecured creditors need to approve a CVA for it to be given the go-ahead and it was reported over the weekend that a number of landlords had pushed back against the plan, while the British Property Federation has criticised New Look for using the CVA process to “rip up” leases.

In a statement the company said: “At this stage, New Look has already received the support of 100% of its revolving credit facility lenders and operating facility lenders and the support of more than 90% of its bondholders, who wrote off over £1bn of debt in 2019 and provided £150m of new money bonds at that time. Support from these stakeholders provides more than the requisite consent thresholds required to implement the transaction.

“However and as previously referred, the transaction is contingent upon 75% of unsecured creditors of New Look Retailers Limited supporting the terms of the CVA proposal to rebase the Group‘s UK leasehold obligations. The CVA is due to be considered at a meeting of unsecured creditors on 15 September. If the vote is successful, the financial restructuring can be concluded. 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.”

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