C. & J. Clark International Ltd. (Clarks), the UK-based international shoe manufacturer and retailer, has reportedly agreed to sell a majority stake in a £100 million rescue deal to Hong Kong-based PE firm LionRock Capital.
Sources cite that the agreement will see the 195-year-old firm enter into a form of administration recognized as a CVA (Company Voluntary Arrangement), with Clark insisting that no employments will be lost, and staff members will continue to be paid.
Since the COVID-19 pandemic, Somerset-based firm has been struggling significantly to garner revenues. As per the CVA conditions, landlords will receive a particular percentage of a store’s revenue for their rent instead of depending on a fixed lease.
Philip de Klerk who is the interim finance chief of Clarks said that it was a move the firm had made out of necessity. He added that it is important to highlight that the company is not announcing the closure of retail stores today, and employees and suppliers will continue to be paid.
The deal is subject to a shareholders' vote next month. If successful, LionRock will procure a majority stake in Clarks with the Clark family will remain investors.
In 2019, the firm shut down its only remaining UK factory, which had started in 2017 exclusively to manufacture desert boots. Earlier, the last remaining Clarks factory in the UK, Millom in Cumbria, shut-in 2006 as production was transferred to the Far East.
Apparently, Clarks is a recent high street firm that has taken proactive insolvency measures to avoid total collapse. Retailers including Jigsaw, New Look, and Edinburgh Woollen Mill have also used insolvency processes to decrease debts as their retail stores struggled because of the COVID-19 pandemic.
Meanwhile, Clarks shops are not considered as essential under the new lockdown rules which begin on Thursday. However, it can still offer a click and collect service for consumers.
Source Credit - https://www.bbc.com/news/uk-england-54815809