Superdry plc (SDRY)
Superdry plc: Proposed Restructuring Plan, Equity Raise and Delisting
16-Apr-2024 / 07:00 GMT/BST

NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, IN WHOLE OR IN PART, DIRECTLY OR INDIRECTLY, IN OR INTO ANY JURISDICTION WHERE TO DO SO WOULD CONSTITUTE A VIOLATION OF THE RELEVANT LAWS OR REGULATIONS OF SUCH JURISDICTION.

NOTHING IN THIS ANNOUNCEMENT SHALL CONSTITUTE OR FORM A PART OF ANY OFFER, INVITATION OR RECOMMENDATION TO PURCHASE, SELL OR SUBSCRIBE FOR ANY SECURITIES IN ANY JURISDICTION.  NOTHING IN THIS ANNOUNCEMENT SHOULD BE INTERPRETED AS A TERM OR CONDITION OF THE EQUITY RAISE.  NOTHING CONTAINED IN THIS ANNOUNCEMENT SHALL FORM THE BASIS OF, OR BE RELIED UPON IN CONNECTION WITH, OR ACT AS AN INDUCEMENT TO ENTER INTO, ANY INVESTMENT ACTIVITY. ANY DECISION TO PURCHASE, SUBSCRIBE FOR OR OTHERWISE ACQUIRE, OR TO SELL OR OTHERWISE DISPOSE OF, ANY SECURITIES MENTIONED IN THIS ANNOUNCEMENT MUST BE MADE ONLY ON THE BASIS OF THE INFORMATION CONTAINED IN AND INCORPORATED BY REFERENCE INTO THE CIRCULAR, ONCE PUBLISHED.  PLEASE SEE THE IMPORTANT NOTICES AT THE END OF THIS ANNOUNCEMENT.

THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION FOR THE PURPOSES OF ARTICLE 7 OF THE UK VERSION OF THE MARKET ABUSE REGULATION (EU 596/2014), WHICH IS PART OF UK LAW BY VIRTUE OF THE EUROPEAN UNION (WITHDRAWAL) ACT 2018.

For immediate release

16 April 2024

 

Superdry plc

(“Superdry” or the “Company”)

 

Proposed Restructuring Plan, Equity Raise and Delisting

Superdry previously announced that it has been exploring various material cost saving options as part of a broader turnaround plan that positions the Company for long-term success.

Today, in support of that objective, the Company announces that C-Retail Limited (the “Plan Company”), a wholly-owned subsidiary of the Company which owns the leasehold portfolio of the Superdry group (the “Group”) from which its UK store retail business trades, is launching a restructuring plan pursuant to Part 26A of the Companies Act 2006, which will principally involve a restructuring of its UK property estate and retail cost base (the “Restructuring Plan”). The Restructuring Plan is a key element of the Company’s turnaround plan that is intended to help the Company deliver its new, more financially sustainable, target operating model.

In order to support the Company’s transition to this new target operating model over the coming years, Superdry is today also announcing an equity raise that will provide necessary liquidity headroom (the “Equity Raise”), as well as its intention to delist from the London Stock Exchange (the “Delisting”), which will allow the Company to benefit from significant cost savings associated with being listed and implement its turnaround plan away from the heightened exposure of public markets. The Equity Raise is fully supported and underwritten by Julian Dunkerton, Superdry’s CEO and Co-Founder.

Together, the Restructuring Plan, Equity Raise and Delisting constitute a key package of measures that are needed to allow Superdry to return to a more stable footing, accelerate its turnaround plan and drive it towards a viable and sustainable future. Therefore, each element of this package will be inter-conditional upon the others, such that the package as a whole requires each of the Restructuring Plan, Equity Raise and Delisting to be approved.

Restructuring Plan

The Restructuring Plan will principally involve and facilitate the compromise and amendment of the Plan Company’s leasehold obligations, to reduce losses and property-related (including rent) liabilities. The Restructuring Plan will also involve the compromise of the Plan Company’s business rates liabilities owed to local authorities and will effect amendments to the Group’s debt facility agreements with its principal secured lenders, BB Funding (GBP) S.à r.l.  (“Bantry Bay”) and HUK 128 Limited (“Hilco”).

A restructuring plan is a formal procedure under Part 26A of the Companies Act 2006 for companies in financial difficulties, that are affecting its ability to carry on as a going concern, to agree with its creditors a compromise or arrangement in respect of its debts owed to those creditors.

On 28 March 2024, the Group’s debt facility agreement with Hilco was amended to provide for two incremental facilities for an aggregate amount of £20 million, including a seasonal facility of up to £10 million. This seasonal facility is conditional upon Hilco being satisfied that sufficient progress has been made by the Plan Company in relation to the implementation of cost savings measures, including the Restructuring Plan.

The Restructuring Plan, once completed, is expected to result in:

  • rent reductions on 39 UK sites;

 

  • the extension of the maturity date of loans made under the Group’s debt facility agreements with Bantry Bay and Hilco;

 

  • confirmation from Hilco that the conditions to making the seasonal incremental facility described above have been satisfied; and

 

  • material cash savings from rent and business rate compromises over the 3 year period of the Restructuring Plan.

 

The Restructuring Plan is conditional on the Company receiving the proceeds of the Equity Raise to help ensure that the Company has the necessary liquidity headroom to deliver its turnaround plan. The Company has consulted with Bantry Bay and Hilco, who have consented to the launching of the Restructuring Plan and remain supportive of the Company. 

Further details on the Restructuring Plan are set out in Appendix 1 to this announcement and included in the Practice Statement Letter (“PSL”) sent to impacted creditors today.

The launch of the Restructuring Plan is not expected to affect the ordinary course operations of Superdry, and in particular:

  • the Group’s suppliers, employees and landlords of sites outside of the UK will not be affected;

 

  • except for the creditors compromised by the Restructuring Plan (which principally comprise landlords of UK sites, rating authorities, Bantry Bay and Hilco), no other creditors’ claims will be affected; and

 

  • the process to implement the Restructuring Plan is expected to complete in June 2024, with the sanction hearing for the Restructuring Plan expected to be held on 17 and 18 June 2024 (the Sanction Hearing”).

The Plan Company believes that, unless the Restructuring Plan comes into effect, it will need to enter administration and other companies in the Group will need to enter into administration or an equivalent insolvency process. This outcome would leave creditors, including the creditors whose claims would otherwise be compromised by the Restructuring Plan, materially worse off than they would be under the Restructuring Plan.

The Restructuring Plan is an important element of helping the Company deliver its new, more financially sustainable, target operating model. The target operating model also incorporates other measures including, among others: returning the underlying Retail channel to positive like-for-like revenue growth through internal initiatives such as improved product ranges and a reallocation of marketing spend, and also an improvement in the external environment; an improvement in gross margins through initiatives such as improved promotional strategies; and a more efficient and focused operating cost base appropriate for the Group’s target revenue base, benefitting from initiatives including the delisting. On a medium-to-long term view, whilst recognising there is a complex pathway in the interim to navigate in order to deliver this, the target operating model targets Group revenue of between £350m to £400m, a gross margin slightly ahead of current levels, and mid to high-single digit EBITDA margin (on a pre-IFRS 16 basis).

Equity Raise

The Company continues to face challenging trading conditions and, as announced on 28 March 2024, recently extended and increased its secondary lending facility with Hilco to provide improved liquidity headroom as it implements its turnaround plan. To further bolster that liquidity headroom and provide the Company with the appropriate degree of funding certainty to enter into the Restructuring Plan, the Company is today announcing a proposed Equity Raise (which is fully 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 in one of two different ways. Shareholders will be asked to approve both different options and, assuming shareholders do so, Superdry’s independent directors, in consultation with Julian Dunkerton and Peel Hunt (the Company’s financial advisers), will in due course (after shareholders have voted) choose the option to be adopted by Superdry.  The two different options are as follows:

  • Option A: an open offer at £0.01 per share to raise gross proceeds of the sterling equivalent of up to €8 million (the “Open Offer”); or

 

  • Option B: a placing at £0.05 per share to raise gross proceeds of £10 million (the “Placing”).

 

In the Open Offer, Superdry’s existing shareholders (other than those in certain restricted overseas jurisdictions) will retain their pre-emption rights and will therefore be able to participate pro rata to their existing shareholdings.  The Open Offer will be fully underwritten by Julian Dunkerton, which ensures that the Group will receive the full €8 million. The Placing would be open to Julian Dunkerton only (with the pre-emption rights of existing shareholders disapplied).

Completion of the Equity Raise is conditional on a number of matters, including:

  • shareholders passing the necessary resolutions to approve the Open Offer and/or the Placing as well as the Delisting (the “Resolutions”) at a general meeting to be convened by the Company in due course (the General Meeting”); and

 

  • the Restructuring Plan having been sanctioned by the court.

 

Julian Dunkerton, who held approximately 26.36% of Superdry’s issued share capital as at the close of business on 15 April 2024, has irrevocably undertaken to vote in favour of all the resolutions to be proposed at the General Meeting (other than those on which he is not entitled to vote). 

Similarly, each of Superdry’s directors who holds shares in Superdry (excluding Julian Dunkerton) has irrevocably undertaken to vote in favour of all the resolutions to be proposed at the General Meeting in respect of his or her own holding of Superdry shares, which in aggregate represented approximately 0.23% of the Company’s issued share capital as at the close of business on 15 April 2024.

The Resolutions will include approval by independent shareholders of Julian Dunkerton’s participation in the Equity Raise as a “related party transaction” for the purposes of Chapter 11 of the Listing Rules and for the purposes of Rule 9 of the City Code on Takeovers and Mergers

Further details about the Equity Raise, including the Company’s approach to determining which of Option A or Option B will be implemented if both are approved by shareholders at the General Meeting, will be included in a shareholder circular, expected to be published in May 2024 (the Circular”).

Superdry has also been exploring raising funds through potential transactions relating to its brand and intellectual property in non-core territories. However, the Board considers it unlikely that any such deals could be negotiated and completed in the requisite timeframes.

Delisting

Given the material changes to the Company’s business envisioned under the new target operating model, the Company considers it best to implement these changes away from the heightened exposure of public markets. In addition, the Company believes it can achieve significant annual cost savings from the Delisting that will contribute to delivering its target operating model.

As a result, subject to shareholder approval at the General Meeting, the Company intends to make the relevant applications to effect the cancellation of the listing of its shares on the Official List maintained by the Financial Conduct Authority (“FCA”) and their trading on the London Stock Exchange’s Main Market for listed securities.

The Company intends to explore the implementation of a matched bargain facility with a third party matched bargain facility provider in the event the Company is delisted. This will facilitate shareholders buying and selling shares on a matched bargain basis following the Delisting. If the Company decides to implement such a facility, further detail about it will be set out in the Circular.

Further details of the Delisting and the implications of the Delisting for shareholders will be included in the Circular.

Anticipated timetable

Publication of PSL

16 April 2024

Restructuring Plan Convening Hearing

16 May 2024

Publication of Circular

May 2024

General Meeting

June 2024

Restructuring Plan Sanction Hearing

17 and 18 June 2024

Restructuring Plan becomes effective

June 2024

Delisting

July 2024

Equity Raise completes

July 2024

 

 

These dates are provided by way of indicative guidance and are subject to change. If any of the above dates change, the Company will make further announcements as appropriate.

 

Peter Sjӧlander, Superdry Chairman, commented on today’s proposals:

“The Board has spent a lot of time engaging with Julian Dunkerton to come up with a plan which gives the business the best possible prospects for the long term while protecting the interests of shareholders and other stakeholders to the greatest extent possible. The business has faced extraordinary external challenges and, while good progress has been made on our cost saving initiatives, more needs to be done to get the business on a stable financial footing for the future. We believe that the proposed Restructuring Plan, combined with the Equity Raise fully supported and underwritten by Julian, is the best way to achieve this, together with a delisting which would further reduce costs and enable the business to progress the turnaround. While we recognise the compromises we are asking from some of our stakeholder groups, we would urge them to support the proposals which we believe are the best way of ensuring Superdry’s recovery over the long-term.”

Julian Dunkerton, Superdry CEO and Co-Founder, commented on today’s proposals:

“Today’s announcement marks a critical moment in Superdry’s history. At its heart, these proposals are putting the business on the right footing to secure its long-term future following a period of unprecedented challenges. I am aware of the implications for all our stakeholders and I have sought to protect their interests as much as possible in the proposals we are announcing today. My decision to underwrite this equity raise demonstrates my continued commitment to Superdry, its stakeholders, its suppliers and the people who work for it. My passion for this great British brand remains as strong today as it was when I founded the business.”

 

Enquiries

Superdry

Peter Sjӧlander, Chairman

 

44 (0) 1242 586747

Peel Hunt LLP (Sole Sponsor and Financial Adviser to Superdry)

George Sellar

Michael Nicholson

Andrew Clark

Edward Lowe

 

44 (0) 207 418 8900

 

Teneo Financial Advisory Limited (Financial Adviser to the Plan Company)

Gavin Maher

Jonathan Lees

 

44 (0) 208 052 2345

Brunswick Group LLP (Financial PR)

Tim Danaher

44 (0) 207 404 5959

 

The person responsible for releasing this announcement is Jennifer Richardson, General Counsel & Company Secretary.

 

Appendix 1

Restructuring Plan

The Restructuring Plan is an integral part of the Company’s turnaround plan and transition to a new target operating model. The Company and the Plan Company believe that there is no other viable or acceptable alternative to the Restructuring Plan that would return the business to a stable financial footing, and without this process they believe that the Plan Company and other members of the Group would enter insolvency in the near term.

The Restructuring Plan will enable the Plan Company to undertake a fundamental restructuring of its UK property portfolio which will accelerate the delivery of its own and the Group’s turnaround plan.  The Restructuring Plan will not materially affect any other external creditors of the Plan Company or suppliers to the Group, except for those landlords of compromised sites, rating authorities and certain other creditors associated with the Plan Company’s UK property portfolio and the Plan Company’s secured creditors (Bantry Bay and Hilco).  If approved and implemented, the Restructuring Plan will demonstrably provide these creditors with a greater return than the amount that it is estimated they would receive if the Plan Company and the other companies in the Group were to enter insolvency.

Superdry has, with advice from Teneo, their financial adviser on the Restructuring Plan, carried out a comprehensive review of the Plan Company’s UK property portfolio and identified 39 sites that are underperforming and/or on unfavourable lease terms or, in certain cases, not expected to have significant strategic value going forward.

Under the Restructuring Plan, it is proposed that most of the Plan Company’s landlords of UK sites and concession counterparty creditors will be arranged into seven separate classes. The rent and other payments due in respect of the leases and concession contracts in each of those classes will be compromised to a level which would mean that they are able to make a sustainable EBITDA contribution to the group (if they do not already) or will be reduced to zero.

Liabilities owed by certain Group companies under the debt facility provided by Bantry Bay will also be compromised / amended pursuant to the Restructuring Plan such that:

  1. the final repayment date in respect of loans made will be extended from 22 December 2025 to the date immediately following the date falling three years after the Restructuring Plan takes effect; and

 

  1. all defaults and events of default caused by the entry into the Restructuring Plan, the Delisting and the Equity Raise will be waived.

Liabilities owed by certain Group companies under debt facilities provided by Hilco will also be compromised / amended pursuant to the Restructuring Plan such that:

  1. the final repayment date in respect of loans made under the Hilco Facilities Agreement will be extended from 7 February 2025 to the date immediately after the date falling three years after the Restructuring Plan takes effect;

 

  1. Hilco will confirm that the conditions to borrowing under the incremental seasonal facility referred to above have been satisfied; and

 

  1. all defaults and events of default caused by the entry into the Restructuring Plan, the Delisting and the Equity Raise will be waived.

The Restructuring Plan will also compromise:

  1. all business rates arears owed by the Plan Company to local authorities in respect of the period from and including 1 April 2024 to the effective date of the Restructuring Plan; and

 

  1. liabilities of the Plan Company in respect of business rates for the period in which the relevant store would be void in the “relevant alternative” (being an administration of the Plan Company).

The Restructuring Plan will not compromise claims of any creditors other than those set out above. Accordingly, the claims of all suppliers and customers, the entitlements of employees, liabilities owed to certain ancillary finance providers and sums owed to HMRC will continue to be paid in full.

The launch of the Restructuring Plan does not affect the current ordinary course operations of the Group. No member of the Group is in and will not be in administration as a result of launching the Restructuring Plan.

 

IMPORTANT NOTICES

This announcement has been issued by and is the sole responsibility of the Company. The information contained in this announcement is for background purposes only and does not purport to be full or complete. No reliance may or should be placed by any person for any purpose whatsoever on the information contained in this announcement or on its accuracy, fairness or completeness. The information in this announcement is subject to change without notice.

Neither this announcement nor anything contained in it shall form the basis of, or be relied upon in conjunction with, any offer or commitment whatsoever in any jurisdiction. Investors should not acquire any securities to be offered pursuant to the Equity Raise (“New Ordinary Shares”) except on the basis of the information contained in the Circular to be published by the Company in connection with the Equity Raise and the application form which will accompany the Circular (the “Application Form”).

Neither the content of the Company’s website, nor any website accessible by hyperlinks on the Company’s website, is incorporated in, or forms part of, this announcement. The Circular will provide further details of the New Ordinary Shares being offered pursuant to the Equity Raise.

This announcement is for information purposes only and is not intended to and does not constitute or form part of any offer or invitation to purchase or subscribe for, or any solicitation to purchase or subscribe for, New Ordinary Shares or to take up any entitlements to New Ordinary Shares in any jurisdiction. No offer or invitation to purchase or subscribe for, or any solicitation to purchase or subscribe for, New Ordinary Shares or to take up any entitlements to New Ordinary Shares will be made in any jurisdiction in which such an offer or solicitation is unlawful. The information contained in this announcement and the Circular is not for release, publication or distribution to persons in  any jurisdiction where the extension or availability of the Equity Raise (and any other transaction contemplated thereby) would breach any applicable law or regulation, and, subject to certain exceptions, should not be distributed, forwarded to or transmitted in or into any jurisdiction where to do so might constitute a violation of local securities laws or regulations.

The distribution of this announcement, the Circular, the Application Form and the offering or transfer of New Ordinary Shares into jurisdictions other than the United Kingdom may be restricted by law, and, therefore, persons into whose possession this announcement, the Circular, the Application Form and/or any accompanying documents comes should inform themselves about and observe any such restrictions. Any failure to comply with any such restrictions may constitute a violation of the securities laws of such jurisdiction. In particular, subject to certain exceptions, this announcement, the Circular and the Application Form should not be distributed, forwarded to or transmitted in or into any jurisdiction where the extension or availability of the Equity Raise (and any other transaction contemplated thereby) would breach any applicable law or regulation.

Recipients of this announcement, the Circular and/or the Application Form should conduct their own investigation, evaluation and analysis of the business, data and property described in this announcement and/or the Circular. This announcement does not constitute a recommendation concerning any investor’s options with respect to the Equity Raise. The price and value of securities can go down as well as up. Past performance is not a guide to future performance. The contents of this announcement are not to be construed as legal, business, financial or tax advice. Each shareholder or prospective investor should consult his, her or its own legal adviser, business adviser, financial adviser or tax adviser for legal, financial, business or tax advice.

Notice to all investors

Peel Hunt, which is authorised and regulated by the FCA in the UK, is acting exclusively for Superdry and no one else in connection with the matters described in this announcement and will not be responsible to anyone other than Superdry for providing the protections afforded to clients of Peel Hunt, nor for providing advice in connection with the matters referred to herein. Neither Peel Hunt nor any of its subsidiaries, branches or affiliates owes or accepts any duty, liability or responsibility whatsoever (whether direct or indirect, whether in contract, in tort, under statute or otherwise) to any person who is not a client of Peel Hunt in connection with this announcement, any statement contained herein or otherwise.

Forward-looking statements

This announcement contains forward-looking statements, including with respect to financial information, that are based on current expectations or beliefs, as well as assumptions about future events. These forward-looking statements can be identified by the fact that they do not relate only to historical or current facts. In some cases, forward-looking statements use words such as “anticipate”, “target”, “expect”, “estimate”, “intend”, “plan”, “goal”, “believe”, “will”, “may”, “should”, “would”, “could”, “is confident”, or other words of similar meaning.

None of the Company, its officers, advisers or any other person gives any representation, assurance or guarantee that the occurrence of the events expressed or implied in any forward-looking statements in this announcement will actually occur, in part or in whole.

No undue reliance should be placed on any such statements, because they speak only as at the date of this announcement and, by their very nature, they are subject to known and unknown risks and uncertainties and can be affected by other factors that could cause actual results, and the Company’s plans and objectives, to differ materially from those expressed or implied in the forward-looking statements. No representation or warranty is made that any forward-looking statement will come to pass. Forward-looking statements are not fact and should not be relied upon as being necessarily indicative of future results, and readers of this announcement are cautioned not to place undue reliance on any forward-looking statements, including those regarding prospective financial information. You are advised to read the Circular when published and the information incorporated by reference therein in their entirety. 

No statement in this announcement is intended as a profit forecast or estimate for any period, and no statement in this announcement should be interpreted to mean that underlying operating profit for the current or future financial years would necessarily be above a minimum level, or match or exceed the historical published operating profit or set a minimum level of operating profit, nor that earnings or earnings per share or dividend per share for the Company for the current or future financial years would necessarily match or exceed the historical published earnings or earnings per share or dividend per share for the Company.

The Company is not under any obligation to update or revise publicly any forward-looking statement contained within this announcement, whether as a result of new information, future events or otherwise, other than in accordance with its legal or regulatory obligations. Additionally, statements of the intentions or beliefs of the board of directors of the Company reflect the present intentions and beliefs of the board of directors of the Company as at the date of this announcement and may be subject to change as the composition of the board of directors of the Company alters, or as circumstances require.



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