// New Look creditors approve CVA proposal, saving it from collapse and protecting 11,000 jobs
// New Look will now switch 400+ UK stores to a turnover-based rent model & a 3-year rent holiday on 68 remaining stores
// The CVA also means New Look can complete its financial restructuring
New Look’s CVA has been given the official go-ahead after creditors met to today and approved the proposals with a majority vote in favour.
The fashion retailer’s CVA entails switching more than 400 of its UK stores to a turnover-based rent model, a three-year rent holiday on its 68 remaining stores, and enhanced landlord break clauses.
No store closures are featured in the CVA, and all 11,000-plus jobs have been saved.
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New Look first revealed its CVA proposal last month. It marks second one for the retailer in two and a half years.
The CVA’s approval today also means the comprehensive financial recapitalisation transaction announced on August 13 to extend New Look’s facilities, deliver new investment, and significantly de-leverage the balance sheet can now be progressed towards completion.
New Look added that the refinancing, which had already received the requisite support from its secured financial creditors, would provide it with “the financial strength, funding and flexibility to execute on its strategy”.
The strategy includes a debt-for-equity swap on New Look’s current debt – reducing senior debt from £550 million to £100 million – and significantly decreasing interest costs, an extension of primary working capital facilities which provide further financial support with no near-term maturities, and an investment of £40 million of new capital to support the business plan.
The approval of New Look’s CVA comes amid growing speculation that its future was hanging in the balance after major landlords – such as British Land and Landsec – said they would vote against it.
The fashion retailer had also canvassed interest in a sale of the business last month in conjunction with the CVA proposal in a bid to secure its future after the coronavirus pandemic led to a dramatic plunge in sales and footfall.
However, the deadline passed and no offers were made for the retailer.
In order for New Look’s CVA to have been approved, at least 75 per cent of creditors – which includes landlords – had to vote in favour of the proposal today.
“I would like to take this opportunity to thank our landlords and creditors for their support for our CVA, which, alongside the consequential financial restructuring that will now be progressed, will provide us with enhanced financial strength and flexibility, and a sustainable platform for future trading and investment,” New Look chief executive Nigel Oddy said.
“We still fundamentally believe the physical store has a significant part to play in the overall retail market and our omnichannel strategy.
“We look forward to working closely with our landlords and all creditors to ensure we can navigate the uncertain times ahead together.
“Over the course of the last three years we have successfully implemented our turnaround plan: returning to the proven broader appeal product and value led pricing that we are known for, fundamentally realigning our supply chain to be faster and more flexible; making our omnichannel model more cohesive than ever; driving operational efficiencies; and bringing in new talent across the business.
“The impact of Covid-19 has reinforced this relentless focus on our customer-orientated strategy.”
Daniel Butters, supervisor at Deloitte, which handled the CVA, said: “The approval of the CVA is an important milestone in New Look’s restructuring, enabling the business to move forward.
“The CVA will provide a stable platform for its management team’s strategy and we wish them well for the future.”
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