Debenhams has fallen into administration and the retailer’s lenders have seize control of the company in a move tipped to trigger store closures and job losses. Retail giant Debenhams has been placed into administration and the retailer’s lenders have seized control of the company in a move tipped to trigger store closures and job losses.
The move comes after a £200m rescue plan from Mike Ashley’s Sports Direct was rejected. The offer involved underwriting a rights issue which would see existing investors buying newly-issued shares and was an advance on an £150m plan tabled on Monday, which was rejected. Under Mr Ashley’s latest proposal, Debenhams’ lenders would have had to agree to write off £82m of its £720m debt mountain, as well as install the tycoon as chief executive.
Lenders to Debenhams said the latest proposal, on the terms set out, was “not sufficient”. Shareholders such as Mr Ashley’s Sports Direct, which holds a 30 per cent stake, will see their investments wiped out. The pre-pack administration undertaken by the struggling department store chain will see its debt reduced and comes ahead of a wider restructuring which will see around 50 stores close via a Company Voluntary Arrangement.
Mr Ashley’s attempts to take control of Debenhams had become increasingly desperate, and over the weekend the businessman demanded the board be investigated, two members to undergo lie detector tests and trading in its shares to be suspended. Sports Direct added on Tuesday that it was continuing to “actively evaluate” a conventional takeover, priced at 5p per share.
