Proactive Investors - Run By Investors For Investors

Debenhams completes £200mln refinancing but remains open to takeover bid from Mike Ashley's Sport Direct

“By entering into the facilities there is provision for Sports Direct to participate in a comprehensive solution, and we will be contacting Sports Direct to outline once again the terms on which their constructive participation would be possible if they wish to participate," Debenhams said.
Debenhams
Debenhams will now look to close stores and negotiate lower rents as part of a restructuring plan

Debenhams PLC (LON:DEB) has completed a refinancing that will provide £200mln in funding to ensure the struggling department chain can continue trading.

The company said it has served a draw down notice for the first £101mln facility but the availability of the second £99mln facility will depend on whether its largest shareholder, Sports Direct International plc (LON:SPD), makes a firm takeover bid or loan offer.

Debenhams warned that shareholders, including Sports Direct, will be wiped out if it uses the second facility.

"We will now move to the next phase of the restructuring of the business, which includes reducing rents and reshaping our store portfolio, as we have referenced in previous announcements. These actions are necessary to ensure the strongest possible platform to support the business going forward," said Debenhams chairman Terry Duddy.

READ: Debenhams bondholders back refinancing plan in blow to Sport Direct's Mike Ashley

Sports Direct, which is run by Mike Ashley and owns nearly 30% of Debenhams, said on Wednesday that it was weighing up a £61.4mln offer to buy the retailer.

Under the 5p-per-share cash offer, Ashley would step down as chief executive of Sports Direct and take the helm of Debenhams.

Debenhams has said it would consider a possible takeover approach but any offer would not address its immediate working capital needs.

“The company therefore had no implementable alternative to its well-developed plans to enter into the facilities in order to protect the interests of its broader group of stakeholders including employees, pension holders, suppliers and lenders,” Debenhams said on Friday.

“By entering into the facilities there is provision for Sports Direct to participate in a comprehensive solution, and we will be contacting Sports Direct to outline once again the terms on which their constructive participation would be possible if they wish to participate.”

The announcement comes a day after Debenhams said a majority of holders of its 5.25% senior notes due 2021 had agreed to change the terms of their bonds, paving the way to complete the refinancing.

The termination of this process with bondholders was a condition of Sports Direct making a takeover offer. 

In a Friday statement, Sport Direct said was now considering its options.

“As the termination of Debenhams noteholder consent process was one of the waivable pre-conditions to the proposal, Sports Direct is giving further consideration to Debenhams' announcement in the context of the proposal," it said.

View full DEB profile View Profile

Debenhams PLC Timeline

Related Articles

Scans and MRI
November 28 2018
The firm's subsidiary, Imaging Biometrics, recently appointed a South Korean distributor a few weeks after receiving the first commercial order for its StoneChecker technology
H&T
December 03 2018
“I think customers are seeing that we do offer value and that really is the answer,” said chief executive John Nichols
Drain
December 18 2018
MetroRod has been in operation for 30 years but only became a franchise relatively recently

© Proactive Investors 2019

Proactive Investors Limited, trading as “Proactiveinvestors United Kingdom”, is Authorised and regulated by the Financial Conduct Authority.
Registered in England with Company Registration number 05639690. Group VAT registration number 872070825 FCA Registration number 559082. You can contact us here.

Market Indices, Commodities and Regulatory News Headlines copyright © Morningstar. Data delayed 15 minutes unless otherwise indicated. Terms of use