// Clarks seeks to launch CVA proposal that could lead to 50 stores being shut down
// The 195-year old shoe retailer will secure £100m investment from LionRock Capital
Clarks is reportedly planning to launch a CVA in an effort to permanently shut stores despite previously denying the insolvency measure was under consideration.
The British shoe retailer resorted to a CVA because the proposed £100 million rescue deal from Hong Kong-based private equity firm LionRock Capital is contingent on creditors approving the insolvency measure, Sky News reported.
Clarks could potential shutter up to 50 stores while the remaining sites switch to a turnover rent model as part of the CVA proposals.
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- Clarks pension trustees hire advisers to secure new investment
- Hong Kong investor joins bidding war for majority stake in Clarks
Moreover, the store closures will lead to hundreds of job cuts.
LionRock’s injection of funds into Clarks, which is likely to involve more than £100 million, would only take place if a CVA was approved.
If a deal is completed, it would see the footwear chain’s founding family shareholder renounce majority control for the first time in its 195-year history.
Last week, Clarks pension trustees were working with advisers amid talks about the company’s future to secure new investment.
The shoe retailer’s retirement scheme drafted in advisers from Penfida and FRP Advisory as discussions with two potential bidders were in progress.
Clarks’ pension trustees were “actively engaged” with the company about interest from bidders LionRock Capital and Alteri Investors
Clarks first revealed discussions about a share sale back in May, with around £100 million and £150 million likely to be injected into the business as part of any deal.
Chief executive Giorgio Presca said at the time that its new strategy Made to Last would aim to transform it amid the pandemic.
Clarks also said the strategy would result in 900 job losses, and the creation of 200 new roles.
A string of accountancy firms are working on a restructuring of Clarks as it continues to struggle with trading amid the pandemic.
The chain’s family shareholders have drafted in KPMG to advise them, while Deloitte has been hired by the management team.
PwC had been appointed by a syndicate of the footwear chain’s lenders as they assess the Covid-19 impact on its prospects.
Meanwhile, investment bank Rothschild is also advising the company.
Clarks trades from about 345 stores in the UK, employing thousands of people.
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