New Look CVA gets thumbs-up from creditors, chain avoids sale or liquidation
New Look has clinched the support it needed from its creditors to get its company voluntary arrangement across the finishing line with the majority voting in its favour.
Without the ‘yes’ vote, the company could have gone into liquidation or been bought by an acquisition-hungry online-only retailer such as Boohoo, both options potentially meaning the loss of over 11,000 jobs.
It means the value fashion retailer can now pay low turnover-based rents on more than 400 stores with zero rents to be paid for the next three years on nearly 70 more.
The CVA had looked in jeopardy earlier this week as some landlords had already said they’d vote against it, with the possibility that the requisite 75% support might not be achieved.
The approval also means that the company can swap existing debt for equity, with its lenders being owed only around £100 million rather than the £550 million they had been owed before. And the process also frees up the £40 million of extra funding that the lenders are pumping in to the company to help its turnaround.
It’s a rare piece of good news on the high street with a raft of recent reports detailing thousands of job losses and many store closures.
After the vote got through, CEO Nigel Oddy said: “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.
“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.
And he added that “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”
He also said the firm is determined to enhance its position as “the leading convenient broad-appeal fashion destination loved by 25- to 45-year-olds as we navigate the post-Covid-19 landscape.”
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