Value fashion retailer New Look has launched an £800m bond issue to repay outstanding debt.

If completed, the fashion retailer will use the cash to repay all debt under existing senior facilities and a mezzanine facility.

It will also pay related accrued interest and break-costs a cash consideration related to existing payment-in-kind facility - the so-called PIK notes that became a financial millstone.

The move would give new chief executive Anders Kristiansen room for manourvre.

New Look had to scrap plans for a £650m IPO in 2010 when investors raised concerns over the level of its debt.

New Look’s equity is controlled by private equity firms Apax and Permira. Management, including founder and commercial director Tom Singh, also hold a significant interest.

The retailer has struggled with its product offer in recent years, as Primark built on its dominance in the value fashion sector. New Look axed its chief executive Carl McPhail in 2011 and chairman John Gildersleeve exited shortly afterwards.

Independent analyst Nick Bubb said: “Friday’s news that New Look is launching a £800m bond to help replace half its infamous high-interest ‘PIK’ notes should, if successful, do a bit to cut the onerous interest charge, but total net debt will still be £1.1bn and nobody should be under any illusions that the business is in rude health.

“The recovery in Christmas sales came off a very low base and we note that there has been no update on current trading, despite the impact of the cold weather on the fashion market in general.”