Fashion merchant fresh look should undertake another debt restructuring in as much many years, because it grapples because of the results of the coronavirus pandemic on its already-struggling company.
The group will convert 440m of debt into equity and inject 40m of new cash.it will start another business voluntary contract, to modify almost all of its stores on to turnover-based rents, in a move that if effective would set a substantial precedent in the sector.
Nigel oddy, new look chief executive, stated the impact of covid-19 combined with future debt burden while the most likely permanent structural move...from real retail to on the web meant the business required additional money and a smaller stability sheet.
Additionally, out-of absolute necessity, we are preparing to launch a cva that will reset our local rental expense base back to market lease through a turnover-based design that fairly reflects the near future performance associated with the company and wider retail market, he included.
Fresh look stopped having to pay lease in march and had been lobbying landlords to change to turnover-linked costs.
The teams main bank loan providers have actually decided to extend 165m worth of existing credit services to at least summer 2023, even though prices will increase and there will be a fresh set of covenants.
Holders associated with the 440m of senior secured bonds, including alcentra, avenue capital and cqs, will trade their financial obligation for a 20 per cent non-voting equity fascination with the group and a 40m shareholder loan. they'll also be provided junior financial obligation devices in a keeping organization, with four-fifths of this equity in that entity.
The key lenders have agreed to the overview proposals, but for the debt-for-equity swap to be effective three-quarters of this noteholders must vote in favour of it. the exact same percentage of landlords will have to straight back the cva, where the recapitalisation is conditional.
The cva will start later on in august, and failure to secure adequate backing could result in fresh look becoming put into management.
Perella weinberg, the teams adviser, will individually conduct a sale process targeted at ascertaining the value associated with merchant, with any reputable bids possibly supplying an alternative to the recapitalisation.
New look has already been through a thorough restructuring procedure, using a cva in 2018 to close a large number of shops, and a debt-for-equity swap just last year that slice the face value of senior bonds by three-quarters and all sorts of but wiped out junior debtholders. it left brait, the investment business controlled by south african billionaire christo wiese, holding under a fifth associated with equity.
Following its first cva, the retailer appointed high-powered brand-new administrators, including retail troubleshooter alistair mcgeorge and former marks and spencer executive mr oddy, changed its working model to pay attention to mid-market womens manner, and withdrew from overseas areas such as for instance asia.
However, coronavirus struck at the same time whenever its recovery was however delicate. all its 496 stores sealed if the united kingdom government purchased a lockdown in march, and though 459 have reopened, product sales tend to be down 38 % so far. pre-coronavirus, fresh look made around 20 % of product sales using the internet.