New Look Hires Banks To Tackle £1bn Debt Pile
New Look, the high street fashion retailer, is appointing two Wall Street banking giants to help tackle its £1bn mountain of debt.
I have learnt that Goldman Sachs and JP Morgan are about to be enlisted to assist with a refinancing of New Look's debts. The talks will come ahead of a 2015 deadline imposed under its existing agreements with the company's lenders, which include HSBC and Royal Bank of Scotland.
The focus of the refinancing talks will be a £750m payment-in-kind (PIK) note which was issued several years ago and which has accumulated hundreds of millions of pounds in additional interest since.
Among the options likely to be considered by New Look and its advisers will be the issuance of high-yield debt to replace the PIK, although insiders said today that the process was at a very early stage.
The appointment of Goldman Sachs and JP Morgan comes as another prominent high street fashion edges closer to collapse. Republic, which is owned by the US private equity firm TPG, has gone into administration today after failing to secure better rent terms from landlords.
New Look is also owned by the buyout industry, having been taken over in 2004 by Apax Partners and Permira.
New Look is one of Britain's biggest retailers of women's fashion, with about 600 stores in the UK, a number that may shrink in the coming years as sales increasingly shift online.
The refinancing of the PIK note is partly complicated by the fact that some of the debt is held by a group of senior Apax executives, according to people close to the company.
New Look, which declined to comment, performed well over Christmas, reporting a 3.7% increase in like-for-like sales during the 14 weeks to December 29.
Its performance contrasted with that of some rivals, including Marks & Spencer, which suffered a 3.8% fall in like-for-like clothing sales.
Announcing the festive trading figures, Mr McGeorge said: "The group has delivered an excellent result in a challenging trading environment, and this performance is a testament to the success of our recovery programme and the strength of our brand.
"Once again customers have been tactical in their shopping through December, delaying spending until later in the month and searching out best value, which New Look was well equipped to deliver.
"Additionally, our online sales have been very strong, up over 50% on last year.
"Looking ahead we expect the economic outlook to remain challenging, however, we are confident in our ability to maintain the positive momentum being generated from the improved value of our ranges, our store refurbishment programme and continued growth of our online offer."