JOHANNESBURG - Brait SE, owner of struggling U.K. apparel chain New Look, launched a sweeping overhaul as leading shareholder Christo Wiese seeks to salvage his investment after seeing his other retail assets plunge in value.
The investment company outlined a refinancing worth almost twice as much as its 7.1 billion-rand ($480 million) market value and said the plan could result in a sale of assets, which also include Virgin Active gyms, within three to five years. Its Johannesburg-listed shares fell as much as 14%.
Brait has been struggling to turn around New Look, which has been hit by the U.K.’s retail crisis as shoppers defect to trendier online fashion sellers like Boohoo Group Plc. The investment firm bought the chain for 780 million pounds ($1 billion) and now values it at zero. Wiese appointed a former investment banker and dealmaker as his representative to the board in September, a clear indication that he wanted change.
The problems at New Look have added to Wiese’s woes after the implosion at furniture retailer Steinhoff International Holdings NV, where he stepped down as chairman after an accounting scandal. Earlier this month he said he’d also retire from Shoprite Holdings Ltd., whose shares have fallen 37% this year amid a shareholder backlash against his position as chairman and the company’s biggest investor.
As part of Brait’s restructuring plan, Wiese will invest up to 1 billion rand in an equity raising while EPE Capital Partners’ Ethos Private Equity will take a stake in the firm and manage its portfolio. Brait will also buy back some of its convertible bonds and refinance a revolving credit facility. Brait said the plan will reduce its net debt by as much as 5.3 billion rand.
The company said it will also adopt a new strategy focused on returning capital to shareholders over the next five years. That could involve the sale of assets including Virgin Active, a large holding in Iceland Foods, the U.K. frozen food retailer, and a stake in New Look.
After the recapitalization of Brait, a new board will be proposed to shareholders for approval.
Shares of the company, which also owns the South African maker of Blue Ribbon bread and Snowflake flour, fell the most in four months. The stock has slumped 52% this year and is heading for a fourth year of significant declines.
Brait earlier also reported a smaller loss in the six months through September at 127 million euros ($140 million), from 235 million euro a year earlier.