LONDON (Alliance News) - Debenhams PLC on Friday said it launched a consent solicitation with its bondholders in order to seek permission to raise GBP200 million by amending the terms of its loan notes.
Meanwhile, shareholder Sports Direct International PLC continued to put pressure on Debenhams, offering to buy its Danish business for GBP100 million in cash, but only if Sports Direct chief Mike Ashley is put in charge of the rest of Debenhams.
Debenhams shares were down 35% trading at 1.90 pence each on Friday morning. The traded as low as 1.10p earlier in the day, having changed hands as high 25p within the past year.
The struggling department store chain operator launched the solicitations with holders of its 5.25% senior notes due 2021. It expects the process to remain open until Thursday.
So far, Debenhams said that noteholders with around 30% of the notes are supporting of the company's proposed changes and have agreed to vote in favour of them.
The amendments to the notes will allow the company to secure new money providing liquidity headroom for Debenhams' future funding needs and delivering stability, the retailer said.
"A successful consent solicitation would allow the company to enter into new money facilities and give Debenhams the ability to pursue restructuring options to secure the future of the business. However, certain of these options - if they materialise - would result in no equity value for the company's current shareholders," the company added.
Among the changes, Debenhams is seeking permissions to allow the company to put in place new money facilities on a secured basis of up to GBP200 million from its existing lenders and noteholders.
It is also seeking to put in place inter creditor arrangements, as well as securing waivers and amendments to the notes that are a condition to putting in place the new money facilities.
A consent fee of 0.75% of the outstanding principal amount of the notes also is being offered to holders who vote before the expiration of the solicitation process, Debenhams added.
Earlier in March, Debenhams said it was in "advanced negotiations" with its lenders for approximately GBP150 million of additional facilities. Of the total, GBP40 million is to be used in order to refinance its bridge facility secured in mid-February.
Meanwhile, Sports Direct, which holds a 29% stake in Debenhams, on Friday said that it "wished to confirm" an offer to acquire Debenhams' Danish business, Magasin Du Nord, for GBP100 million in cash. The unit was put up for sale last year.
Under Sports Direct's proposal, Debenhams would have a 12 month option to buy back Magasin Du Nord at the price at which it was sold to Sports Direct.
Debenhams would also have the right to continue to market the business, gaining the benefit from any uplift above the initial sale consideration if it was sold to a third party within the 12-month period.
If accepted, Sports Direct proposed that its chief executive officer & founder Ashley take on the role of CEO at Debenhams to assist the restructuring programme. If appointed, Ashley would step down from his current roles as a director & CEO of Sports Direct.
Meanwhile, Debenhams' board is facing removal after receiving a requisition notice by Sports Direct on Thursday. Sports Direct is looking to oust all Debenhams directors bar Rachel Osborne, who was appointed in September.
Sports Direct shares were 0.5% higher at 289.10p.
