Debenhams enters administration as lenders take control
The Debenhams department store chain has entered administration and been sold as part of a prepack administration process to a group controlled by its lenders.
The group is thought to include the hedge funds Alcentra, Angelo Gordon and Silver Point Capital.
The move follows a rejection by Debenhams of a revised £200 rescue bid by Mike Ashley’s Sports Direct earlier this week. The deal would have meant that Debenhams would have been forced to accept Ashley as its new chief executive.
It also means that previous shareholders, including Ashley, will effectively lose their equity in the business.
Under its new ownership, Debenhams will have available to it significant additional funding in line with the £200 million new money facilities it announced on 29 March.
While the retailer’s 165 stores will continue to trade as normal, Debenhams said it will proceed with a restructuring of its store estate according to plans already announced that include the closure of some stores.
Terry Duddy, 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, whilst 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."
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