Administrators have been appointed to Debenhams plc after the offer of a £200m investment from major shareholder and owner of Sports Direct, Mike Ashley, was rejected.
Shares were suspended today as Chad Griffin, Simon Kirkhope and Andrew Johnson of FTI Consulting LLP were appointed joint administrators to oversee the completion of the group's pre-pack sale (other than the plc) to a newly incorporated company, controlled by its secured lenders.
With fresh access to £200m funding, Debenhams will continue to trade as normal, and the underlying companies operated under the group's umbrella – including its commercial relationships with suppliers, employees, pension holders and customers – will be unaffected. However, shareholders are likely to lose their equity.
The group will continue to implement the restructuring of its operations, including reducing the store portfolio by some 50 locations, which, "if approved, will result in a significant overall reduction in the group's rent burden and underpin a sustainable future".
The plc announced on 29th March that it has put in place New Money Facilities with its existing lenders which provided the group with £200m of additional funding, including £40m to refinance the bridge facility announced on 12th February. The business states that while Sports Direct International made a number of proposals, each of which was considered by the plc's board, none were deemed deliverable.
Debenhams' chairman Terry Duddy says: "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."