Clarks has announced that its shareholders have approved a financial rescue deal from a Hong Kong-based private equity company.
As a result of this new partnership, none of Clarks’ 320 stores will have to close, and no jobs will be lost.
Under the CVA, 60 of Clarks’ stores will pay no rent at all, while rent will be turnover-based at the remaining 260, with rent being based on how much customers spend at each store.
The CVA was approved by the retailer’s creditors last month, however Clarks’ landlords’ associations came out against it.
The deal is now expected to be completed in the new year with the Clark family remaining invested in the business.
In a statement, Clarks said: “The shareholder approval will enable Clarks to form a partnership with LionRock Capital, a seasoned Asian private equity firm, who will acquire a majority stake in the business for an investment of £100 million.”
Philip de Klerk, interim CFO at Clarks, said “Like many businesses in our sector, the impact of the Covid-19 pandemic and the current economic uncertainty has created a tough retail environment.
“The investment from LionRock Capital and the restructuring of our retail footprint, combined with the on-going support from our existing lenders and our focus on cash management and cost control, will provide funding for the company’s seasonal working capital needs and its transformation strategy.”
He added: “In order to address the permanent shift in structural shopping behaviour as a result of the Covid-19 pandemic, the CVA is being launched out of absolute necessity.
“The proposal to creditors outlines a combination of a reduction of rent and a move to rebase Clarks’ rental cost base through a turnover- based model that aligns to future performance and reflects the wider retail market.”
Daniel Tseung, Founder and Managing Director of LionRock Capital added: “Clarks is one of the world’s most recognised consumer names and we look forward to working with the Clark family in extending its tradition of providing customers with top quality products and exceptional service.
“We are extremely pleased to have the opportunity to partner with Clarks in expanding the company’s global operations and worldwide customer footprint. Our investment will not only strengthen Clarks’ position as one of the world’s most recognised brands, but also allow growth into key emerging markets.”