Debenhams has been taken over by its lenders, wiping out shareholders including Mike Ashley’s Sports Direct and paving the way for store closures that put thousands of jobs at risk.
Ashley, who spent at least £150m on building up a near 30% stake in Debenhams, lost out after the company and its lenders rejected a last-ditch offer of a new £200m cash injection as it was dependent on him becoming chief executive.
The offer made in the early hours of Tuesday morning came after an offer of £150m made on Monday was also rejected for the same reason.
In a statement on Tuesday, Sports Direct said it continued to “actively evaluate all possible options to support Debenhams”, including a £61m bid for the company. Debenhams suspended trading in its shares soon afterwards.
The department store group said its 165 outlets would continue to trade under a pre-pack deal which only affects its listed holding company.
Debenhams’ operating companies have been sold to the group’s lenders in return for reducing its £620m debt pile and injecting nearly £100m of new funds to keep the group afloat.
The group’s lenders want to close up to 50 stores via an insolvency process known as a company voluntary arrangement. Details of the plan, which landlords must approve, are expected to be announced within weeks.
The deal comes after Debenhams struggled to adapt to the switch towards shopping online, held back by a heavy debt burden and large stores on long leases.
Debenhams had a market value of more than £300m less than a year ago. However, after a string of profits warnings and and a bitter battle with its major shareholder, Sports Direct, the group’s shares have slumped in value to just less than £23m.
The Guardian
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