Administrators Chad Griffin, Simon Kirkhope and Andrew Johnson of FTI Consulting LLP have been appointed to Debenhams and have sold the group to its lenders.
The announcement this afternoon (April 9) says: “The plc Administrators have immediately sold all of plc’s ownership of the Group to a newly incorporated company controlled by the Group’s secured lenders in a pre-packaged sale.” This means the business, which has debts of some £640million, will continue to trade as usual for now under the control of a group of lenders and releases access to £200million. Lenders include banks and US hedge funds.
A statement released by Debenhams today says the joint administrators have made the decision that the latest move is in the best interests of the company, employees and shareholders.
The Transaction included provisions for a group sale process to be launched immediately. The recovery, if any, to the plc’s shareholders will depend on the outcome of the sale process which must see full repayment of the Group’s debt. At this stage there is not expected to be a distribution to the plc’s shareholders.
The suspension of Debenhams shares took effect at 8am today but administrators have now requested the cancellation of the listing. This is expected to take place at 8am tomorrow.
However, Debenhams had already proposed closing some 50 branches. And this restructure will still go ahead with the aim of delivering a “significant overall reduction in the Group’s rent burden and underpinning a sustainable future for the Group.”
A list of stores at risk has not been released.
Terry Duddy, Debenhams’ Chairman, said:“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.”
Debenhams is one of two anchor stores – the other being Marks & Spencer – at Westwood Cross, which opened in June 2005. Overall there are 165 stores and some 25,000 employees across the country.