Boohoo is understood to be planning a swoop on New Look if its CVA is not voted through by landlords this week, with the fashion retailer warning it could collapse without rent cuts.
The online fashion retailer is reportedly circling New Look should its CVA vote, which is set to take place on Tuesday, fail to garner sufficient support from landlords.
Last week, New Look confirmed that the deadline for businesses to snap up the firm had passed, meaning it relied on landlords supporting its CVA proposal to continue operating in its current form.
New Look needs the support of 75% of creditors for its CVA to pass, with the proposal stipulating that property owners of 68 shops would accept no rent for a three-year period, while more than 400 other stores would switch to turnover-based rent agreements.
Landlords are understood to be resisting New Look’s proposal, which would be the chain’s second CVA in two and a half years if it were to pass.
New Look has hinted that it could collapse if its CVA bid is not successful.
According to The Times, Boohoo would ditch New Look’s store estate and turn the business into an online-only fashion brand, similar to previous acquisitions Karen Millen, Oasis and Warehouse, if it were to acquire the business.
A source close to the situation said a deal of this kind would not be “palatable” to New Look, and would be viewed as a last resort.
New Look said: “Our proposed CVA and consequential recapitalisation transaction, which involves a material reduction of debt, extension of the company’s banking facilities and a cash investment of £40m, represents the best outcome for all stakeholders, including employees, suppliers, landlords and all other creditors.”
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