Debenhams falls into hands of lenders

Roman Schwartz
April 9, 2019

Mr Ashley has been desperately trying to gain control of Debenhams, but the retailer said his proposal, which would have made him chief executive, was "not sufficient".

The news follows reports of tumbling profits and a previously-announced plan to axe 50 of its 166 stores nationwide.

British department store chain Debenhams has entered into a pre-pack administration, and immediately been taken over by its lenders.

The chain, which has stores in Norwich, King's Lynn and Great Yarmouth, chose to hand itself over to lenders instead of accepting a rescue deal from Sports Direct owner Mike Ashley.

Sports Direct boss Ashley increased his offer to underwrite the business to 200 million pounds from an earlier offer of 150 million pounds at around midnight on Monday.

With tensions increasing between the two sides, Ashley even demanded that Debenhams board members take lie detector tests.

It means all of its 165 stores will continue trading as normal for now - but this has not allayed fears that outlets will be shut and jobs will be lost in the near future.

Debenhams chairman Terry Duddy said: "It is disappointing to reach a conclusion that will result in no value for our equity holders".

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Debenhams said in a statement on Tuesday that offer was not sufficient for the lenders.

'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.

The administration is another blow to a retail sector already reeling from the collapse of BHS, electronics firm Maplin, department store House of Fraser and cycle shop Evans.

This will wipe out shareholders' stakes in the company, including Ashley's 30 per cent stake in the company.

George Charles from money saving website www.MoneySavingHeroes.co.uk, said: "The high street today has taken a massive hit in Debenhams going into administration".

Administrators have sold the group to a newly-incorporated company controlled by Debenhams' lenders, including hedge funds thought to include Alcentra, Angelo Gordon and Silver Point Capital.

Only two months ago, it was announced that the chain was set to close 90 stores across the United Kingdom and Ireland.

Debenhams, which has issued three profit warnings in the previous year, is not alone in its financial woes.

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