Bondholders in troubled high street chain New Look are reported to have appointed the investment bank Rothschild to protect their interests in anticipation of a financial restructuring.
The business is due to post a trading update this week and further losses are expected, following the £10.4m underlying loss it reported last November. In the interim its majority owner, South African investor Brait, has written down the chain’s value to zero, having paid £780m for it three years ago.
Some New Look suppliers also had part or all of their credit insurance removed. Credit insurance protects suppliers from the moment an order is made to payment being received for goods or services supplied; in the instance of credit insurance being removed suppliers can demand payment up front.
Now, The Times has reported, that a group of bondholders – believed to include private equity firm Carlyle, asset managers CQS and M&G Investments, investor Alcentra, and Avenue Capital Group, a distressed-debt investor – have formed a committee to protect their interests.
The group have taken action in anticipation of a financial restructure at the business, which has debts of around £1bn. The retailer is also believed to be considering the closure of up to 10% of its store estate (around 60 stores).
Last November New Look brought former chairman Alistair McGeorge back to the business in an attempt to turn its fortunes around, following the exit of former CEO Anders Kristansen. McGeorge said at the time of his appointment that the change would not happen overnight but “I am confident we will implement the necessary changes to get the company back on track.”
The company has been affected by the general turmoil on the high street and competition from etailers, but also McGeorge has felt that the business made errors with its product by making the brand too young and directional.
“We will focus on ensuring that we buy into the right trends with the right product, have an efficient supply chain, and provide customers with great value. New Look is a remarkable brand supported by brilliant people, and we will focus on getting back to basics and rebuilding our position within the UK womenswear market,” McGeorge said last November.