New Look launches CVA and recapitalisation

New Look said that the CVA – its second – was part of a suite of measures unveiled to put the business on a firmer footing after trading was hit by the Covid-19 pandemic. 

New Look chief executive Nigel Oddy said the CVA was launched “out of absolute necessity” due to the “significant” financial impact of the ongoing health crisis. 

Alongside the CVA, New Look said it would also be launching a debt for equity swap on senior debt, reducing that from £550m to £100m. 

The retailer has also been in conversation with lenders about extending its credit facilities and has secured a £40m injection of new capital into the business, provided it can win support for its CVA. 

Retail Week revealed in late June that New Look was considering options to slash rents and possibly close some of its stores after sales plummeted due to the lockdown and slow return of consumer footfall. 

While 459 of the retailer’s 496 stores have reopened across the UK since June 1, New Look said that sales are down 38% like-for-like. 

The retailer said it expected to formally launch the proposed CVA on August 26. 

Oddy said: “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.”