// Clarks’ CVA proposal receives the greenlight with 90% of creditors voting in favour of it
// The rescue deal seeks to convert around 60 of Clarks’ 320 UK stores to zero rent
// The CVA’s approval was a requirement of LionRock Capital’s investment in Clarks, for which it will acquire a £100m majority stake
Clarks has been given the green light it needs to push on with a rescue plan in the form of a CVA, which includes no rent on many of its stores.
The footwear retailer said that 90 per cent of its creditors – which include landlords – have voted in favour of its CVA proposals.
It clears a major hurdle for the rescue of Clarks, spearheaded by LionRock Capital, a Hong Kong-based private equity firm that said a CVA was required if it were to invest £100 million to acquire a majority stake in the 195-year-old business.
- Landlords slam Clarks over CVA rental terms
- Clarks rescued in £100m deal
- Clarks begins talks with landlords ahead of CVA proposal
“I am very pleased that the CVA was approved today. This is a significant step towards the formation of our new partnership with LionRock Capital,” said Philip de Klerk, Clarks’ interim chief executive.
The deal still needs approval from shareholders before LionRock can take a majority stake in the business – a move that would subsequently end Clarks’ history of being majority-owned by the family of the same name.
The retailer had recorded a £83 million loss in 2019.
Deloitte partner Gavin Maher, who has worked on the CVA, said: “The approval of the CVA is an important milestone for Clarks, enabling the business to move forward.
“The CVA, together with the proposed investment from LionRock, will provide a stable platform upon which the management’s transformation strategy can be delivered.”
Earlier this month, Clarks said that the CVA would allow it to continue paying its near-4000 strong staff, and that no jobs would be lost.
However, reports from Retail Week earlier this month suggested that staff had been placed into consultation.
All of Clarks’ 320 stores in the UK will remain open, but rent will be slashed to zero on 60 of them.
The rest of the shops will switch to a turnover-based model, which will see the retailer pay rent that is calculated by the amount of cash each shop takes in.
Dozens of companies have struggled to stay open during the Covid-19 pandemic.
Earlier this week, Peacocks and Jaeger entered administration shortly after stablemates Ponden Homes and Edinburgh Woollen Mill met the same fate.
There is still a 28-day period during which Clarks’ CVA can be challenged.
with PA Wires