Yahoo Finance Clarks to get £100m investment from Hong Kong’s LionRock
Hong-Kong based private equity firm LionRock Capital is set to pump £100m ($130m) and acquire a majority stake in troubled shoemaker Clarks, with the Clark founding family to remain a key shareholder in the business.
“The investment will enable Clarks to position the business for future long-term sustainable growth and deliver its strategy to revitalise the iconic footwear brand as it enters its third century in line with its ‘Made to Last’ strategy announced in May 2020,” the company said in a statement on Wednesday.
That strategy included around 900 job cuts, along with a focus on sustainability and digital enhancements.
The 195-year-old British shoe brand said it will also be able to expand globally, most notably in China and the rest of Asia Pacific.
The LionRock investment in Clarks will be subject to shareholder approval, and shareholders will be asked to vote on the proposed transaction in December.
Philip de Klerk, interim CFO at Clarks, said: “Like many businesses in our sector, the impact of the COVID-19 pandemic and the current economic uncertainty has created a tough retail environment. The investment from LionRock Capital and the restructuring of our retail footprint, combined with the on-going support from our existing lenders and our focus on cash management and cost control, will provide funding for the company’s seasonal working capital needs and its transformation strategy.
He also explained that a company voluntary arrangement, a statutory agreement between an insolvent limited company and its creditors, is being launched “out of absolute necessity.”
As part of the CVA, Clarks will move 60 of 320 stores to nil rent.
“It is important to stress that we are not announcing the closure of any stores today, and employees and suppliers will continue to be paid,” said De Klerk.
READ MORE: Shoe firm Clarks plans 900 job cuts with some stores shut for good
Daniel Tseung, LionRock founder, said: “We believe our investment would create a stable platform for the company from which to manage through the unprecedented crisis, holistically restructure and transform the business and further expedite the brand’s growth globally going forward."
In May Clarks had announced plans to slash 900 office jobs over the next 18 months as part of a shakeup of the company.
The high street retailer had already furloughed thousands of staff on the government’s coronavirus job retention scheme, while its hundreds of stores had shut during the lockdown. Clarks had earlier said “a small number” of stores with lease renewals approaching will not reopen as the lockdown eases and would be shut for good.
WATCH: What is a V-shaped economic recovery?
