New Look is poised to launch a company voluntary arrangement (CVA) within days following the result of a crunch consultation with its bondholders, Retail Week has learned.
According to documents seen by Retail Week, “the vast majority” of the embattled fashion chain’s bondholders have agreed to crucial changes to their terms, paving the way for a potential CVA – an option that now looks increasingly likely.
As previously reported, New Look had written to bondholders to request the changes in order to open the door for a possible CVA.
New Look required 50.1% of bondholders to agree to the changes – a vital hurdle it has overcome this evening.
The business has always insisted that a CVA was just one of “a range of options” being considered in ongoing efforts to transform its fortunes.
It said last week that “no final decision” had been made regarding whether or not it would pursue a CVA.
However, Retail Week revealed on Friday that New Look has already met with its biggest landlords to discuss its proposals, which would allow it to slash rents by as much as 60% in underperforming stores.
Under the plans seen by Retail Week, New Look would pay landlords just 40% of its current rental liability on 70 stores. After six months, the rent on those shops would be reduced to zero.
It is thought that both New Look and its landlords would have the right to scrap the retailer’s lease on those particular stores at any time, meaning the retailer could swing the axe on all 70 shops, should it wish to do so.
One property source said those proposals are now expected to be formalised with the launch of a CVA by the end of this week.
A New Look spokesman said: “The company has previously indicated that a potential CVA is being considered as part of a range of options to improve the operational performance of the business.
“The company is pleased to have secured support from the vast majority of bondholders to help facilitate a CVA proposal as it evaluates this option.”
The latest developments come as New Look grapples with torrid trading as it battles to compete with the likes of H&M, Zara and Primark.
The retailer suffered a 10.7% nosedive in like-for-like sales during the 39 weeks to December 23, as its losses swelled to £123.5m.
New Look has drafted in former boss Alistair McGeorge for a second stint at the helm in a bid to revive its fortunes, following the exit of Anders Kristiansen last September.
McGeorge is focusing his turnaround efforts on installing a less fashion-forward, more democratic aesthetic, designed to appeal to women between the ages of 20 and 40.