UK retailer New Look faces administration risk if restructuring blocked

LONDON (Reuters) - Struggling British fashion retailer New Look warned on Wednesday it would be forced to consider “less favourable alternatives” if unsecured creditors do not support its latest restructuring plan, potentially putting about 11,000 jobs at risk.

A New Look spokesman declined to comment on what the alternatives would be. However, analysts see administration or liquidation as likely.

Last month the group launched a second major restructuring of its store estate in three years, this time asking landlords to agree new turnover-based leases at 402 stores to help get it through the coronavirus crisis.

It has agreed with its banks and bondholders a recapitalisation, including a debt for equity swap, that would reduce senior debt from about 550 million pounds ($711 million) to about 100 million pounds and inject new capital.

However, the recapitalisation can only be delivered if New Look secures the support of its landlords for a company voluntary arrangement (CVA) at a Sept. 15 vote.

“If unsecured creditors do not support the company’s CVA, the directors of the company will have to consider less favourable alternatives than the current transaction for the group’s stakeholders,” it said.

The proposed recapitalisation followed one in January 2019, which left New Look's main shareholders as South African investment firm Brait BATJ.J, along with Alcentra, Avenue Capital and CQS.

In tandem with the recapitalisation, New Look’s adviser Perella Weinberg UK effectively put the company up for sale last month.

The deadline for first round bids was set for Sept. 8.

“While some parties expressed an interest in certain assets of New Look, no bids have been received for the share capital of New Look or an alternative recapitalisation transaction,” New Look said.

Reporting by James Davey; editing by Sarah Young