Debenhams gets go ahead for £200m restructure
Written by Hannah McGrath
Debenhams has announced that bondholders have given it the green light to forge ahead with a £200 million financial restructuring plan which could lead to shareholder value being wiped out.
In a statement to the stock exchange this morning, the department store said that the consent level had been achieved from bondholders to make amendments to loan notes due in 2021. This move will clear the way for the retailer to carry out a restructuring programme which could entail a debt-for-equity swap or a pre-pack administration deal.
Last week, the beleaguered retailer said that such a financial lifeline could result in the loss of shareholder value, including the 30 per cent stake controlled by Mike Ashley’s Sports Direct.
Yesterday, Sports Direct announced it was weighing up a potential £61.4 million takeover of Debenhams in the latest twist of the retail tycoon’s campaign to seize control of the business.
This morning, Debenhams also announced plans to relocate its London headquarters from Regent’s Place to the top floor of its flagship Oxford Street store.
A statement said the decision to surrender the Regent’s Place lease was part of a “cost reduction drive, which is on track to deliver annualised savings of £80 million by 2020”.
Shortly after the department store revealed it had gained approval from bondholders for the refinancing and restructuring scheme, it announced plans to relocate the head office.
It has also been reported that the business could be on course for a Company Voluntary Arrangement (CVA) this year in order to get the company back onto a firm financial footing, after a torrid few months for the High Street retailer saw it issue a series of profit warnings.
Debenhams currently has 165 stores and 25,000 staff members, but has announced plans to close 50 stores over the next five years, putting 4,000 jobs at risk.