New Look lenders poised to take control as it slashes £1 billion debt pile

Lenders to New Look are ready to take control of the ailing fashion retailer as it tries to slash its £1 billion debt pile and stay afloat amid turbulence on the High Street, it emerged on Monday.

The company’s executive chairman Alistair McGeorge said a refinancing deal will “secure the company’s future and grow profitability”.

The fast-fashion chain, which has already closed 86 of its 593 stores in Britain and exited China, hopes to cut its debt to £350 million from £1.3 billion this summer. It will also seek to raise an extra £150 million by issuing new bonds on top of a string of existing ones.

A group of bondholders to New Look have hired FTI Consulting to advise them on the chain's restructuring, which is also advising lenders to struggling Debenhams.

New Look’s owner Brait, which has a 90% stake and is controlled by South African businessman Christo Wiese, plans to hand over control to the retailer’s creditors and potentially reduce its stake to around 18%.

Wiese wrote off the value of New Look to zero in 2017 after it swung to a loss. The management will also hold a 5% stake post-deal.

McGeorge added: “Brait has always been incredibly supportive. They have been encouraging a restructuring of the balance sheet that puts the company first.”

New Look saw its same-store sales in Britain fall by 5.7% in December as rivals lured away shoppers with discounts from mid-November onwards.

As a result “we reduced our expectations”, McGeorge said, and New Look expects to make underlying profits of £57 million for 2019. It also took a £17 million one-off hit from closing the 120 stores in China because the company couldn’t afford to keep them open.

McGeorge, who has been spearheading a turnaround since he was parachuted back into the business in 2017, said “in the coming weeks we’ll work out if we’ll be in Europe or out of Europe”, where it has 85 stores.