Superdry announces restructuring measures to avoid administration

Superdry has revealed its capital and restructuring measures to avoid running an emergency four-week sale process. 

Earlier in April, the struggling retailer had announced it was launching a restructuring plan which would principally involve a restructuring of its UK property estate and retail cost base.

Now the retailer has revealed that the restructuring plan, the equity raise and the delisting constitute a package of measures that are needed to avoid the company entering into insolvency, allow Superdry to return to a more stable footing, accelerate its turnaround plan and drive it towards a viable and sustainable future. 

The measures outlined in the restructuring plan include the compromise of the Plan Company’s business rates liabilities owed to local authorities and amendments to the group’s debt facility agreements with BB Funding (GBP) S.à r.l. (Bantry Bay) and HUK 128 Limited (Hilco).

Once completed, the restructuring plan is expected to result in rent reductions on 39 UK sites as well as the extension of the maturity date of loans made under the group’s debt facility agreements with Bantry Bay and Hilco.

The company also expects that its UK retail footprint will be reduced as a result of landlords terminating certain leases under which the group, following the implementation of the restructuring plan, is no longer required to pay rent or is able to pay significantly reduced rent.

On a medium-to-long term view, whilst recognising that there is a complex pathway in the interim to navigate in order to deliver this, the company is targeting group revenue of between £350m and £400m, a gross margin slightly ahead of current levels, and mid to high-single digit EBITDA margin. 

To further bolster liquidity headroom and provide the company with the appropriate degree of funding certainty to enter into the restructuring plan, the company also announced a proposed equity raise, supported and underwritten by Julian Dunkerton, Superdry’s CEO and co-founder, to provide it with additional equity funding.

The equity raise will be structured as one of two different ways – either as an open offer raising proceeds of £6.8m or as a placing raising proceeds of £10m.

On completion of the equity raise, the retailer will also delist its ordinary shares from the London Stock Exchange’s Main Market.

Superdry announced that the board considers that the capital and restructuring measures and the passing of each of the resolutions are in the best interests of shareholders as a whole. 

Shareholders will be required to vote on the measures during a general meeting that will be held on 14 June. If the resolutions are not approved, the retailer will likely enter administration or an equivalent insolvency process immediately.

Dunkerton, who owns approximately 26% of the company shares, has undertaken to vote in favour of all the resolutions ahead of the GM.