Fashion retailer New Look plans to cut its debt by £1bn and raise more money to turnaround the business.
The company, which is closing its remaining 120 stores in China as well as 60 stores in the UK to return to profitability, said it had agreed with key shareholders to slash its debt from £1.35bn to £350m.
It will raise £150m in new money to finance its business and by cutting its debt its interest payments would be reduced to £40m from £80m a year.
New Look avoided a collapse into administration after creditors and landlords agreed in March to back a plan to close 60 stores in the UK.
Executive chairman Alistair McGeorge said: “Today’s agreement represents a critical step in our turnaround plans and lays the foundations to secure the future and long-term profitability of New Look by materially deleveraging our balance sheet and providing us with the financial flexibility to better attack our future.
“Over the past year we have made significant progress with our wider turnaround plans to rebuild our position in the UK womenswear market and recover the broad appeal of our product whilst implementing significant cost savings and efficiencies.
“However, it has been clear for some time that the Group’s existing level of indebtedness has been constraining our ability to accelerate our turnaround plans and would continue to limit our growth in the future.”
The South African-owned company warned conditions in the UK retail market continued to be challenging.
Total like-for-like sales fell 2.3% in its second quarter in the UK.
From its core UK business it expects earnings before interest tax, depreciation and amortisation of £84m in its 2019 financial year.
New Look forecast a loss of £27m from its non-core business, which includes its stores in China, France, Belgium and Poland.