- Huw Hughes
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Debenhams has announced the agreement of a 200 million pound refinancing
lifeline with its lenders as the embattled retailer continues to fend off a
takeover bid by Mike Ashley’s Sports Direct.
In a statement released by Debenhams, chairman Terry Duddy said the
funding package “secures the future of the Debenhams business and provides
reassurance for Debenhams’ employees, pension holders, suppliers, lenders
and other stakeholders.” Duddy added that the company would continue plans
to close stores and negotiate rent reductions in order to “ensure the
strongest possible platform to support the business going forward.”
According to the BBC, the deal will see 101 million pounds made
available for Debenhams to draw down, while the remaining 99 million will only be accessed if a major shareholder makes a firm offer for the
retailer, or refinances Debenhams debt.
Alternatively, Sports Direct could drop its ongoing bid to oust all but
one of the Debenhams board, and Ashley could either underwrite a rights
issue or offer funding on terms agreed by Debenhams’ lenders.
If neither of these happen, the remaining funds would only be made
available once lenders take control of the business. Debenhams added that
this “would very likely result in no equity value for the company’s current
shareholders”.
Sports Direct, which already owns a near 30 percent share in Debenhams,
responded in a statement saying it was “giving further consideration” to
the proposal.
Photo credit: FashionUnited