New Look In Talks Over £1.1bn Debt Pile
The fashion retailer New Look is poised to hire City advisers to help negotiate a refinancing of its £1bn-plus debt mountain weeks after it emerged as one of the winners of the high street's Christmas trading battle.
I understand that New Look has kicked off talks with a number of banks, including Goldman Sachs, HSBC and JP Morgan, about helping to restructure the company's finances.
The appointment of one of these banks as an adviser is likely within the next few weeks, people close to the situation said on Wednesday, with Goldman said by some insiders to be in a strong position.
New Look's priority is to replace a £700m debt instrument called a payment-in-kind (PIK) note that incurs tens of millions of pounds in additional annual interest payments. The PIK note is held by Apax Partners, one of New Look's shareholders.
The need to refinance the company's debts has been clearly signalled by Alistair McGeorge, New Look's chairman, who was recruited from the discount retailer Matalan two years ago.
Alongside Apax, New Look is owned by Permira, another private equity firm, and Tom Singh, the chain's founder. The investment firms have owned the chain since 2004, making a further attempt to sell or float it highly likely in the next 18 months.
Last year, New Look amended the terms of its existing bank debt, which is due to mature in 2015.
New Look registered a 3.7% rise in like-for-like sales in the 14 weeks to December 29 as it benefited from a move away from the heavy discounting seen the previous Christmas. Its performance contrasted with that of some key 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."
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.
New Look declined to comment on its refinancing plans.