New Look secures £40m funding, preps CVA

New Look has secured an agreement with its creditors to extend its current facilities and deliver £40 million of new investment, and is planning to launch a Company Voluntary Arrangement (CVA).

The fashion retailer will also be able to significantly de-leverage its balance sheet, with current debt reduced from £550 million to £100 million.

“As has been the case for many retailers, New Look’s financial position has been significantly impacted by Covid-19, and over the past five months we have had to take a number of tough but necessary decisions and actions to manage the impact this has had on our business and our people,” said chief executive Nigel Oddy.

“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."

New Look's 459 stores have reopened since lockdown, although trading remains impacted by the decline in footfall seen 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", according to Oddy.

“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 retail operating environment," he stated.

Therefore, "out of absolute necessity", the company is preparing a CVA that would reset the brand's rental cost base back to market rent through a turnover-based model.

“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," Oddy concluded. “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."

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