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Shares drop to record low of 5.19 pence
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Co warns of administration if turnaround plan fails to be implemented
April 16 (Reuters) - British fashion chain Superdry proposed a rescue package on Tuesday involving a fundraising backed by CEO Julian Dunkerton, quitting the London Stock Exchange and a restructuring plan, to avoid falling into administration.
The restructuring plan is dependent on the successful completion of the equity raise, which requires shareholder approval.
Trading in Superdry's shares was briefly halted after a sharp fall early on Tuesday after the company warned it could go into administration if the plan was not implemented. The shares were last down 33% at 5.36 pence, and have fallen 84% this year.
The rescue plan, poised to bring in material cash savings from rent reductions at 39 of Superdry's 94 stores in Britain, and extend the maturity of loans made under the group's debt facility agreements, comes as the company grapples with weak demand and a cash crunch.
"This is the right plan for all stakeholders and it's all about rightsizing," Dunkerton told Reuters in an interview.
The 59-year-old, who co-founded Superdry in 2003 and is also its largest shareholder, said last month that he will not make an offer for the shares that he does not already own.
An equity raise, fully underwritten by Dunkerton, consists of two options - an open offer to raise the sterling-equivalent of 8 million euros ($8.49 million), or a placing to raise gross proceeds of 10 million pounds ($12.45 million).
Dunkerton also said there were no plans to return to a public listing anytime soon.
Known for its jackets and clothing inspired by American vintage styles and Japanese graphics, Superdry said trading conditions continued to remain challenging.
Its popularity has shrunk in recent years, as it struggles to appeal to younger shoppers despite stepping up its marketing efforts. Peer Ted Baker, another well-known brand in the UK, fell into administration last month and announced store closures and job cuts.
"The hope will be the company can restore its ailing brand to health out of the glare of the public markets," said AJ Bell analyst Danni Hewson. ($1 = 0.9427 euros) ($1 = 0.8050 pounds)
