New Look is mulling ways to cut its £1.3bn debt as it seeks to restore its financial fortunes.
New Look has brought advisers onboard to address the issue – dubbed the “debt wall” by company insiders – and a plan is likely to be formalised in the first three months of next year, the Mail on Sunday reported.
The fashion retailer is mulling a debt-for-equity swap, under which existing bondholders would be offered equity in the business instead.
This would help the retailer reduce debt and cut interest payments, which now drain away 80% of New Look’s earnings, according to ratings agency Moody’s.
New Look owner Brait has bought publicly traded bonds in the retailer with a face value of £189m. It is thought Brait– the vehicle of South African billionaire Christo Wiese – could take part in a refinancing of the retailer.
New Look was downgraded by Moody’s last month. The agency said New Look has an “unsustainable capital structure”.
A New Look spokesperson said: “New Look continues to have constructive and supportive conversations with its stakeholders in what is an extremely tough retail environment.”