Brait’s New Look debt-for-equity plan sparks selloff
Christo Wiese's investment holding company plans to cut its holding in the UK clothing chain to as low as 18% by paying creditors with shares
Less than four years after buying a 90% stake in UK fashion chain New Look for more than R14bn, investment group Brait has agreed to a bail-out deal with creditors that will see it owning no more than 18%. News of the debt swap, which will reduce New Look’s debt to £350m (R6.2bn) from £1.35bn, sparked a selloff in Brait’s share price, which collapsed by as much as 21% to R25, the weakest level since 2012. The share traded as high as R167 in 2016. Brait, which wrote down the value of its holding in the group to nil in 2017, will see its stake cut to between 18% and 30%. Brait is just the latest SA company to be caught in the middle of the demise of the UK’s retail sector since the country voted in 2016 to leave the EU, sparking concern about long-term prospects for economic growth and consumer spending. That compounded the pain inflicted by the rise of e-commerce retailers such as Amazon.com. Famous Brands in 2018 agreed to a turnaround plan with creditors of its Gourmet Burger Kitch...
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