Debenhams PLC (LON:DEB) shares retreated on Thursday after the struggling retailer announced that it has secured support from bondholders to carry out a £200mln refinancing deal that could wipe out shareholders, including Mike Ashley’s Sports Direct International PLC (LON:SPD).
The department store chain said a majority of holders of its 5.25% senior notes due 2021 had agreed to change the terms of their bonds, meaning it can press ahead with its debt restructuring.
The announcement will come as a blow to Ashley, who owns nearly 30% of Debenhams through Sports Direct and wants to take control of the company.
Sports Direct on Wednesday said it was weighing up a £61.4mln, or 5p a share cash offer to buy Debenhams in a deal that would include putting Ashley in charge and the termination of the noteholder consent solicitation process.
Debenhams said it would consider any offer that was made but would still carry out a plan to secure £200mln pounds of extra funds from lenders and pursue restructuring options.
The retailer said any takeover bid would not address its immediate funding needs.
Last week, Debenhams warned that its refinancing plan would result in no equity value for its current shareholders, including Sports Direct.
Debenhams shares soared over 50% on Wednesday, following news of Ashley's bid plans, but in afternoon trading today were down 25% at 2.10p.
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