New Look review leads to no bids, says CVA support is key

By

Sandra Halliday

Published
Sep 9, 2020

New Look said Wednesday that no bids have been received for the company as part of the strategic review that saw it exploring buyer interest as well as unveiling its CVA plan. The news came as part of an update that included information on its recapitalisation efforts. And it also came with a warning that if its doesn’t get support for its CVA, it will need to “consider less favourable alternatives”.

After its announcement of the review last month, the company’s adviser started a process to “solicit potential interest in the group by way of a sale transaction or an alternative recapitalisation transaction”.

The deadline was Tuesday and the firm said that “while some parties expressed an interest in certain assets of New Look, no bids have been received for the share capital or an alternative recapitalisation transaction”. 

At the same time, New Look said its debt-for-equity swap that will cut its debt load and enable a £40 million new cash investment in the business, has received “overwhelming support from its secured financial creditors”.

That means all of its revolving credit facility lenders and operating facility lenders are in favour of the plan and it has the support of more than 90% of its bondholders. Support from these stakeholders “provides more than the requisite consent thresholds required to implement the transaction”.  

But the stumbling block to all of this could still be landlords. The transaction is dependent on the CVA being voted through at a meeting on September 15 and the firm needs 75% of unsecured creditors to vote in its favour to achieve this.

If the vote is successful, the financial restructuring can be concluded. But there have been reports that a number of landlords are unhappy with the proposals and if these unsecured creditors don’t vote in favour, as mentioned, “the directors of the company will have to consider less favourable alternatives than the current transaction for the group’s stakeholders including its creditors, customers and employees”.

The company didn’t mention whether it expected to achieve to required 75%, although the comments above suggest it recognises that failure is a possibility. And it didn’t say what the alternatives might be, although there has been speculation in the last week that liquidation is a possibility.