Sky News has learned that a bailout deal for Clarks led by LionRock Capital, a Hong Kong-based private equity firm, is conditional on creditors’ approval of a voluntary agreement (CVA).
Sources said a CVA could involve as many as 50 store closings and a shift to a revenue-based rent model for which fashion retailer New Look recently got close approval.
Closing dozens of stores would lead to hundreds of job cuts, though exact numbers were not clear on Tuesday.
A private equity source has confirmed that LionRock’s infusion of funds into Clarks, which will likely involve more than £ 100million in new money, will only take place if a CVA is approved.
If a deal is struck, the chain’s founding family shareholder would relinquish majority control for the first time in its 195-year history.
Sky News revealed last week that LionRock was in detailed talks with Clarks, with the company’s pension trustees also in negotiations over the deal.
Quarrels over Clarks’ future come as COVID-19 panic continues to wreak havoc on the high streets of Britain, with many businesses collapsing or being forced into layoffs.
In May, Clarks’ new CEO, Giorgio Presca, unveiled a strategy – dubbed “Made to Last” – which will aim to steer it into its third century of operation.
Its plans involve 900 job cuts and 200 new jobs are being created.
The dating series comes after a difficult time for Clarks, which was founded in 1825 and has become synonymous with generations of parents buying their children’s first pair of shoes.
It remains largely owned by the descendants of Cyrus and James Clark, who founded the company in Somerset almost 200 years ago.
Clarks operates out of around 345 stores in the UK, employing thousands of people, many of whom have been laid off by thousands of its store staff as part of the government’s coronavirus job retention program.
In the last year for which figures are available, Clarks reported an after-tax loss of over £ 80million.
“We recently announced Clarks’ long-term ‘Made to Last’ strategy, designed to ensure a sustainable and prosperous future for our business, keeping it in step with changes in the way consumers around the world choose and buy. their shoes, ”the company spokesperson said recently.
“As part of this strategy, the Clarks Board of Directors is currently examining options to best position our company, our employees and the Clarks brand for long-term future growth.