New Look ‘very confident’ of winning CVA support but landlord body hits out

Oddy said he was optimistic about the chances of success because the details of the plan have been informed by discussions with property owners and adjusted to reflect their interests as much as possible. However the proposal drew fire from landlords’ organisation the British Property Federation.

He told Retail Week that following conversations with landlords, New Look’s proposal includes enhanced terms for landlords including better break terms if an alternative tenant is found, minimum rent guarantees over three years and – as a result of refinancing by bondholders – a higher ranking as creditors because of lower secured debt.

Oddy said: “We feel very confident. We hope that landlords recognise where we’ve come from. These are things they’ve asked for and we’ve answered them on every one.”

He said bondholders, which have agreed a £400m debt-for-equity swap as long as the CVA is agreed, have “taken an enormous amount of pain”. 

Assuming the deal goes through, Oddy said New Look would be “in a stronger financial position than it has been in many years”, which should give landlords confidence. “We’ve recognised some aspects of the deal they wanted amended to make it more comfortable for them. It’s now key to get the support of landlords and we’re really hoping we can.”

However the British Property Federation criticised New Look. Chief executive Melanie Leech said: “New Look and [advisor] Deloitte have launched this CVA with reference in their communications that the British Property Federation’s views are reflected in the proposal – this is not true.

”While New Look and Deloitte engaged with us and this resulted in some changes to the proposal, this still fails to meet our best practice standards for CVAs and contains terms that property owners will object to.

“New Look is using this CVA to permanently rewrite its leases, this proposal is not about a time-limited rescue plan. Property owners are increasingly supporting turnover-based rent models underpinned by collaboration and transparency, but CVAs should not become a mechanism to enforce this.

“We understand the challenges facing the retail, hospitality and leisure businesses on our high streets, which are at the sharp end of the Covid-19 pandemic. CVAs, however, must not unfairly compromise property owners, who need to consider the impact on their investors, including the millions of people whose savings and pensions are invested in commercial property.”

Oddy maintained that work already done to improve New Look’s retail proposition would strenghten its appeal to shoppers in future. There has been a greater focus on product and broad fashion appeal, a better omnichannel offer and friendly service in local stores, have put it on a stronger footing, but he added: “Don’t get me wrong, there’s a lot of work to be done.”

Following a CVA last year, New Look’s turnaround efforts were detailed by the pandemic, which Oddy said has “changed the retail environment beyond recognition”.