New Look: Fate lies with landlords as sale option shut off

New Look, which unveiled CVA plans last month after the Covid pandemic decimated trade in its stores, canvassed sale interest as well in a bid to secure its future. However a deadline for offers passed yesterday without progress.

That means that New Look depends upon landlord backing for its CVA when creditors vote on the proposals next week.

New Look said: “Immediately following the [restructuring] announcement, the group’s financial adviser initiated a process to solicit potential interest in the group by way of a sale transaction or an alternative recapitalisation transaction, and the terms upon which they would consider such a transaction. 

“The deadline for first round bids was set for September 8. While some parties expressed an interest in certain assets of New Look, no bids have been received for the share capital of New Look or an alternative recapitalisation transaction.”

As part of its restructuring, New Look has already put in place arrangements to slash debt through a debt-to-equity swap and inject £40m of new investment.

The financial agreements, which would reduce long-term debt from £550m to £100m, and provide access to a £70m facility to cover working capital financing along with the new cash.

However, the financial restructuring depends on backing for the CVA, which must gain the support of 75% of unsecured creditors.

New Look said: “If the vote is successful, the financial restructuring can be concluded. If unsecured creditors do not support the CVA, the directors will have to consider less favourable alternatives than the current transaction for stakeholders including creditors, customers and employees.”