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Thursday 21 November 2019

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Debenhams shares fall on £200m lifeline reports

Written by Hannah McGrath
22/03/2019

Shares in Debenhams have slumped by more than 50 per cent following reports that the struggling High Street retailer is seeking a £200 million financial lifeline to fend off Mike Ashley’s efforts to seize control of the business.

Ashley’s company Sports Direct owns 30 per cent of shares in Debenhams, making it the biggest shareholder.

Last week Debenhams said it was ‘considering’ a £150 million offer from the retail tycoon in a deal that would install him as chief executive by the end of the month.

However, last night Sky News reported that the board was approaching lenders in search of a funding deal that would allow it to carry out a major restructuring plan without granting Ashley more control over the future of the business.

Debenhams confirmed that it is seeking shareholder consent to secure £200 million of money facilities in order to "give Debenhams the ability to pursue restructuring options to secure the future of the business."

However, the company warned that some of the potential options that could arise as part of a refinancing arrangement could results in a loss or wiping out of shareholder value.

The statement read: "However, certain of these options – if they materialise – would result in no equity value for the company’s current shareholders."

Following the statement from Debenhams confirming the plan, shares fell to around 2p, down from 95p in 2015.

In February, the business secured a £40 million strategy with lenders to turn around the business following a pre-tax loss of nearly £500 million last year and three profit warnings.


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