The Debenhams store at Westwood Cross could be at risk after the company rejected a £300million conditional offer from Sports Direct boss Mike Ashley to bail it out.
The rejection of the rescue package means Debenhams is likely to go into pre-pack administration. This means the company can sell assets, or the business as a whole, as a going concern. Administrators take the reins but shareholders, such as Mr Ashley who has a 30% stake, lose their investments.
The firm employs 25,000 people across 165 stores, including the one at Westwood Cross. Employees face an uncertain future although it is thought trade will continue until December this year.
The 240 year old business has debts of some £640million and issued three profit warnings last year.
A statement from Debenhams says: The Board confirms that it received a revised, highly-conditional, proposal from SDI in the early hours of 9 April, which indicated a willingness of Sports Direct to underwrite an equity issue of £200 million.
“The company’s lenders have confirmed to the company that the proposal, on the terms set out, was not sufficient to justify an extension to the 8 April deadline.
“The company anticipates making a further announcement during the course of the day following further discussions with its lenders.”
Shops will continue trading for the time being but Debenhams had already proposed closing some 50 branches.
A list of stores at risk has not been released.
Debenhams is one of two anchor stores – the other being Marks & Spencer – at Westwood Cross, which opened in June 2005.
Westwood Cross is also one of the sites for Claire’s accessory stores which face an uncertain future after US parent company Claire’s Store Inc, filed for bankruptcy earlier this year. The US firm has now emerged from Chapter 11 protection after restructuring some $2billion debt.
