UK fashion retailer New Look has agreed to restructure with a group of debtholders to deleverage and bolster its balance sheet.

The retailer has agreed on a debt-for-equity swap proposal to cut down its long-term debt from $1.73bn to $449.93m and expects to issue new bonds to raise fresh capital of $192.8m.

The retail chain, which is owned by  South Africa-based private investment firm Brait, has agreed in principle to the proposal with senior secured noteholders and the $102.84m of interim funding, which will be refinanced by the £192.8m of fresh capital.

According to the retailer, this arrangement will offer a delevered capital structure, significant liquidity and adequate financial flexibility to support its future development.

This is part of the retailer’s efforts to bolster its financial health in a challenging market.

New Look executive chairman Alistair McGeorge said: “Today’s agreement represents a critical step in our turnaround plans and lays the foundations to secure the future and long-term profitability of New Look by materially deleveraging our balance sheet and providing us with the financial flexibility to better attack our future.”

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“A materially delevered balance sheet and a more flexible capital structure will allow us to better navigate the challenging market environment.”

McGeorge further added: “A materially delevered balance sheet and a more flexible capital structure will allow us to better navigate the challenging market environment and create a stable operating platform so that we can achieve further progress against our turnaround plans.

Following completion of the restructuring, the retail chain’s focus will be to boost profitability by building brand equity and tapping new market opportunities.

According to the British Retail Consortium, several high street chains have witnessed their worst sales period during the Christmas season in a decade.

In the press release, the retailer stated that the conditions in the UK market continue to be challenging. However, the company’s like-for-like performance indicated a “positive trend” from the first quarter of 2018 to mid-November.

Its total UK retail and e-commerce improved from -4.2% in Q1 to -2.3% in Q2.