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Clothing & ShoesHigh Street

New Look reveals plan to slash debt to £350m

High street retailer New Look has announced it has reached an ‘in principle’ debt-for-equity swap proposal with key stakeholders to reduce its debt by 80%.

The fashion chain is seeking to cut its debt from £1.35bn to £350m and issue new bonds to raise £150m in capital. It also expects £80m of interim funding – refinanced by the £150 capital – will pay transaction costs and provide the company with additional financial resources to support its development.

Its annual interest payments will also reduce from £80m to £40m and its borrowings have been extended to 2024. The agreement means the company’s bondholders will hold 72% of the group’s equity.

New Look entered a CVA in March 2018, which included plans to close 60 stores and reduce its rents by 60%.

Alistair McGeorge, executive chairman, said: “Today’s agreement represents a critical step in our turnaround plans and lays the foundations to secure the future and long-term profitability of New Look by materially deleveraging our balance sheet and providing us with the financial flexibility to better attack our future.

“Therefore, today marks an important milestone for the business, our colleagues, our suppliers and all our other stakeholders. A materially delevered balance sheet and a more flexible capital structure will allow us to better navigate the challenging market environment and create a stable operating platform so that we can achieve further progress against our turnaround plans.”

He added: “Upon completion of the restructuring, our focus will be to enhance profitability by continuing to provide fantastic product for our customers, building brand equity and grasping new market opportunities.”

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