LionRock rescues Clarks in £100m deal

Greg Gille
05 November 2020

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Asian private equity firm LionRock Capital has agreed to acquire a majority stake in Britsh footwear manufacturer Clarks as it enters a company voluntary agreement (CVA).

The Clark family will remain invested in the business as part of the £100m deal.

The Clarks UK business has been faced with weaker consumer confidence and reduced footfall, further compounded by the impact of Covid-19. Working capital and turnover have been significantly impacted, placing acute liquidity pressure on the group, Deloitte's Gavin Maher said in a statement.

"The challenges to our business brought on by Covid-19 have meant that we need more resources and investment in order to [...] safeguard the future of our business," Clarks CEO Giorgio Presca said in a statement.

CFO Philip de Klerk said: "The investment from LionRock and the restructuring of our retail footprint, combined with the ongoing 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."

The proposal to creditors involves both a reduction of rent and a move to rebase Clarks' rental cost base through a turnover-based model. As part of the CVA, 60 of the 320 stores will be moved to nil rent.

No store closures have been announced yet, and the company said employees and suppliers will continue to be paid.

The investment is expected to enable Clarks to position the business for future long-term growth, as it looks to revitalise its brand. LionRock also said in a statement it would focus on growing the brand globally, most notably in China and across the rest of Asia Pacific.

The investment is subject to shareholder approval, with shareholders being asked to vote on the proposed transaction in December. The investment is also subject to a CVA for its UK and Irish store portfolio.

Company
Established in the 1800s, Clarks manufactures and sells footwear, with a particular specialisation in children's footwear.

The company closed its last remaining UK factory in 2019, with production moved to east Asia. It is headquartered in Street, Somerset.

People
LionRock Capital – Daniel Tseung (founder, managing director).