Embattled UK department store retailer Debenhams has received the green light to proceed with its proposed GBP200m (US$263m) refinancing plan – a move that is likely to wipe out Sports Direct’s near 30% equity stake along with those of all other shareholders.
In a statement today (28 March), Debenhams confirmed a majority of its bondholders have approved the amendments sought to senior loan notes due in 2021.
The move follows an announcement by the struggling retailer last week that it was seeking a cash injection of up to GBP200m from existing lenders. The funds, Debenhams said, would give it “the ability to pursue restructuring options to secure the future of the business”. But it also warned the deal could wipe out their investment – including its largest shareholder Mike Ashley, who is also the founder of Sports Direct.
Ashley has tried to prevent this from happening by offering Debenhams a GBP150m interest-free loan, one of the conditions of which would be that he is appointed as Debenhams’ CEO. Yesterday, Ashley’s Sports Direct released a statement confirming it was also considering a “possible” offer of GBP61.4m (US$81.1m) to take full control of the struggling British department store chain.
Debenhams’ restructuring plans are likely to see lenders take control of the company under a pre-pack administration.
The retailer said a further update will be provided on completion of the consent solicitation process, which will remain open until 5pm (GMT) today.
