New Look Retail Group Ltd.’s private-equity owners will want to exit the U.K. fashion chain in the next few years, Chief Financial Officer Alistair Miller said, as the company seeks to raise 800 million pounds ($1.2 billion) of bonds.
The retailer has received “a lot of support” from shareholders Permira Advisers LLP and Apax Partners LLP, as well as from holders of its so-called payment-in-kind notes, Miller said in a telephone interview. The sale of bonds is possible now because of “much better” trading and more receptive debt markets, he said.
The Weymouth, England-based company will use the bond proceeds to repay all of its senior and mezzanine debt and part of its PIK notes, the company said in an e-mailed statement. The refinancing plan also includes new PIK debt paying an interest rate of 12%, Miller said.
The company’s existing PIK, where borrowers can pay interest with more debt, totaled 717 million pounds in March 2012, up from 359 million pounds when first offered to investors, according to a statement on its website.
The retailer postponed plans for an initial public offering in 2010 citing an unfavorable market backdrop. Proceeds from the share sale would have been used to reduce the company’s debt and fund growth plans, it said at the time. New Look was acquired by company founder Tom Singh, Permira and Apax Partners in 2004 for 669 million pounds.
A spokeswoman for Permira, who asked not to be named citing company policy, declined to comment on the exit plan. Officials from Apax didn’t respond to an e-mail and calls seeking comment.
The closely-held U.K. fashion chain is offering the senior secured notes in two parts, according to a person familiar with the deal. It is selling five-year fixed-rate notes in pounds and dollars that can be called back after two years, and five-year floating-rate notes in euros and pounds callable after one year, the person said.
Goldman Sachs Group Inc. and JPMorgan Chase & Co. are joint global coordinators on the deal, the person said. Deutsche Bank AG, HSBC Holdings Plc, Lloyds Banking Group Plc and Royal Bank of Scotland Plc are joint bookrunners. The banks will meet investors in Europe and the U.S. from April 29 until May 2.
The company generated revenues of 1.5 billion pounds and earnings before interest, taxes, depreciation and amortization of 198 million pounds in the year to Dec. 22, 2012, it said in the statement. It reported Ebitda of 147 million pounds in the year to March 2012, according to a statement on its website.
The retailer, which has 1,141 stores, received approval last year to extend the maturity of senior loans in exchange for higher interest rates on the debt, people said at the time. Its net debt is about 1.1 billion pounds, according to data compiled by Bloomberg.