UK fashion retail chain New Look received green light from landlords on Tuesday (15) for its company voluntary arrangement (CVA).
Through CVA, the company wanted to move over 400 of its stores on to turnover-based rents approved by creditors, saving over 11,000 jobs.
Tuesday’s vote was crucial for the firm as online retailer Boohoo was ready to pounce on New Look if it fails to fetch a deal.
Last week, financial advisers at Perella Weinberg failed to find a buyer for New Look as part of a separate process to save the company.
The company said the CVA had “been approved by the requisite majority” of more than 75 per cent of creditors, including a swathe of disgruntled landlords, at the vote which happened today.
New Look’s main banks have agreed to extend two loans worth £170m to 2023 and 2024 respectively. But it will have to pay more for it, while bondholders Alcentra, Avenue Capital and CQS will write off £440m of debt if the CVA goes through.
Following the vote, 402 of its stores will move over to turnover-based rent agreements of up to 12 per cent. New Look has also completed a contingent debt-for-equity swap, reducing debt from over £550m to around £100m.
The retailer has also agreed an extension on its primary working capital facilities with its lenders and a cash injection of £40m to support its turnaround plan.
Indian-origin entrepreneur Tom Singh founded New Look in 1969, in Taunton, Somerset, starting with a loan from his parents of £5000.