New Look has written to suppliers to reassure them of its financial position following speculation it could enter administration.
The fashion retailer wrote to suppliers on Monday to reassure them that its finances were in good health despite the £1.1bn of net debt on its balance sheet.
Speculation that the retailer was poised to enter administration and carry out a company voluntary arrangement was described as “absolute nonsense” by sources close to the business, the Financial Times reported.
New Look is expected to report a 25% uplift in EBITDA in the first half of the year in the next few weeks.
The company’s finances have been the source of speculation for some time. After a difficult 2011 when sales fell and former chief executive Carl McPhail exited the business, New Look signed a deal to extend maturities on its senior debt to April 2015.
Chairman Alistair McGeorge said at the time that the deal had allowed New Look to find the time to find a solution to its borrowings.
The deal also earmarked an initial £25m to buy back the payment-in-kind debt at market price, subject to certain tests, the retailer said.
New Look also recently bought back £20m of debt in payment-in-kind notes, which account for about £700m of its net debt and has more than £200m of cash, sources said.
The company has hired Heads, a continental European executive search company, to conduct a search for a new chief executive.
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