UK department store chain Debenhams has rejected a last-ditch lifeline from Sports Direct to save it from lenders.
Retail tycoon, Mike Ashley, whose Sports Direct company owns 30% of Debenhams, offered the struggling retailer an £200m cash injection under the condition he was appointed CEO.
As a result of the rejection, the retail chain has struck a deal with lenders for a buy out of £200m.
In a statement after the news hit yesterday, Ashley said the deal was nothing short of a “national scandal”.
Today, Debenhams’ 166 stores remain open, however, some will be earmarked for closure as it takes steps to reducing its rent burden.
Its commercial relationships with suppliers, employees, pension holders and customers remain with the operating companies, meaning no stakeholders are adversely impacted by the administration.
Debenhams’ Chairman Terry Dubby 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 process with executing our turnaround plans, while 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.”
He added: “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.”
