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UK retailer New Look seeks turnover-based rent in latest restructuring

Thu, 13th Aug 2020 17:57

* Proposes second CVA in three years

* Agrees recapitalisation with banks and bondholders

* Deal will reduce debt by 450 mln stg, inject new capital

* But conditional on CVA approval by landlords

* Store sales down 38% post-lockdown

LONDON, Aug 13 (Reuters) - Struggling British fashion
retailer New Look on Thursday proposed a second major
restructuring of its store estate in three years, this time
asking landlords to agree new turnover-based leases across its
portfolio.

Having closed stores and secured rent reductions from
landlords through a company voluntary arrangement (CVA) in 2018,
the firm said that with its financial position significantly
impacted by COVID-19 it had no choice but to pursue another one.

"Out of absolute necessity, we are preparing to launch a CVA
that would reset our rental cost base back to market rent
through a turnover-based model that fairly reflects the future
performance of the company and wider retail market," it said.

The CVA is expected to be launched on Aug. 26.

New Look has reopened 459 of its 496 stores in the UK and
Ireland since lockdown. Store sales are down 38% on a
like-for-like basis since June 1 predominantly due to the
continued impact of the pandemic on footfall.

It has agreed with its banks and bondholders the key terms
of a recapitalisation.

These include a debt for equity swap that would reduce
senior debt from about 550 million pounds ($720 million) to
about 100 million pounds and significantly decrease interest
costs, an extension of working capital facilities and an
injection of 40 million pounds of new capital.

"However, this recapitalisation - which will enable us to
deliver our long-term strategic plans and safeguard 12,000 jobs
- can only be delivered if we secure the support of our
landlords for our forthcoming CVA," said CEO Nigel Oddy.

The proposed recapitalisation follows one in January 2019,
which left New Look's main shareholders as South African
investment firm Brait, along with Alcentra, Avenue
Capital and CQS.

In tandem with the recapitalisation, New Look's adviser PWP
will contact strategic and financial investors to determine
potential interest in the purchase of New Look shares or assets.

($1 = 0.7639 pounds)
(Reporting by James Davey; editing by David Evans)

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