HomeFashionDebenhams is taken over by lenders as Mike Ashley loses £150m stake
Debenhams is taken over by lenders as Mike Ashley loses £150m stake
March 30, 2019
Updated: Debenhams has been taken over by its lenders, wiping out shareholders including Mike Ashley’s Sports Direct and paving the way for store closures that will put thousands of jobs at risk. The department store group’s 165 outlets will continue to trade under a pre-pack deal that only affects its listed holding company.
Its lenders are made up of High Street banks and US hedge funds. These include Barclays and Bank of Ireland, as well as Silver Point and GoldenTree. The administrators said the lenders would now look to sell the business as soon as possible.
Terry Duddy, the Debenhams chairman, said: “It is disappointing to reach a conclusion that will result in no value for our equity holders.
“However, this transaction will allow Debenhams to continue trading as normal, access the funding we need and proceed with executing our turnaround plans, while deleveraging the group’s balance sheet.
“We remain focused on protecting as many stores and jobs as possible, consistent with establishing a sustainable store portfolio in line with our previous guidance.
“In the meantime, our customers, colleagues, pension holders, suppliers and landlords can be reassured that Debenhams will now be able to move forward on a stable footing. I would like to thank them all for their recent and continuing support.”
The new offer was rejected because the Sports Direct owner, Mr Ashley wanted to be Chief Executive Officer. Mr Ashley, owns near 30% stake in the company.
Debenhams is expected to go through a pre-pack administration, which would mean current shareholders would be wiped out including Mike Ashley.
While the shops would continue trading for now, Debenhams has proposed closing around 50 branches from next year and renegotiating rents with landlords to tackle its funding problems. Debenhams has been struggling for a while and issued three profit warnings last year. It also has a debt pile of £640m.
Debenhams has 165 stores and employs around 25,000 people.
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