Footwear retailer Clarks has been rescued with a £100m investment by a Hong Kong private equity firm – in a deal that will also involve a restructuring of its UK and Ireland store network.
The investment by LionRock Capital is conditional on a company voluntary arrangement (CVA), a form of insolvency allowing it to slash rents to nothing at 60 of its 320 stores.
Interim finance director Philip de Klerk said Clarks was “not announcing the closure of any stores today” and that employees and suppliers would continue to be paid.
Sky News has previously reported that the restructuring would involve the permanent closure of roughly 50 UK shops.
The deal will see the Clark family – who founded the business in Somerset 195 years ago – see their stake reduced, with LionRock becoming the majority owner.
Mr de Klerk said that like other retailers, Clarks had been hit by “the impact of the COVID-19 pandemic and the current economic uncertainty”.
The investment from LionRock would provide it with the “seasonal working capital” it needed as well as helping to pay for the company’s “transformation strategy”.
Mr de Klerk said the CVA was being launched “out of absolute necessity”, with some stores paying zero rent and others moving to a model linking shop rents to turnover.
The rescue deal comes after the pandemic struck Clarks at a time when it was already facing a tough retail environment and also trying to deliver a “Made to Last” transformation plan.
Daniel Tseung, founder and managing director of LionRock, said: “Clarks is one of the world’s most recognised consumer names and we look forward to working with the Clark family in extending its tradition of providing customers with top-quality products and exceptional service.”
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