- Huw Hughes |
Debenhams has announced the agreement of a 200 million pound refinancing lifeline with its lenders as the embattled retailer continues to fend off a takeover bid by Mike Ashley's Sports Direct.
In a statement released by Debenhams, chairman Terry Duddy said the funding package “secures the future of the Debenhams business and provides reassurance for Debenhams' employees, pension holders, suppliers, lenders and other stakeholders.” Duddy added that the company would continue plans to close stores and negotiate rent reductions in order to “ensure the strongest possible platform to support the business going forward."
According to the BBC, the deal will see 101 million pounds made available for Debenhams to draw down, while the remaining 99 million will only be accessed if a major shareholder makes a firm offer for the retailer, or refinances Debenhams debt.
Alternatively, Sports Direct could drop its ongoing bid to oust all but one of the Debenhams board, and Ashley could either underwrite a rights issue or offer funding on terms agreed by Debenhams' lenders.
If neither of these happen, the remaining funds would only be made available once lenders take control of the business. Debenhams added that this "would very likely result in no equity value for the company's current shareholders".
Sports Direct, which already owns a near 30 percent share in Debenhams, responded in a statement saying it was “giving further consideration” to the proposal.
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