LONDON (Alliance News) - Debenhams PLC on Tuesday said it has appointed administrators for the group but operating companies will continue to trade as normal.
The struggling department store chain operator appointed Chad Griffin, Simon Kirkhope and Andrew Johnson of FTI Consulting LLP as joint administrators for Debenhams PLC.
The administrators have completed the sale of the group to a newly-incorporated entity controlled by Debenhmas lenders, unlocking GBP200 million of financing secured at the end of March.
Prior to administration, the availability of facility was dependent on several milestones, including the possible provision of equity by 30% shareholder Sports Direct International PLC.
"While Sports Direct has made a number of highly conditional proposals, each of which was fully considered by the PLC board, none were deemed deliverable given conditionality, timing and other stakeholder obligations and considerations. As these milestones in the new money facilities were not met, the administrators were appointed," Debenhams said.
The company added that at this stage it does not expect that there will be a distribution to shareholders resulting from the sale.
"The recovery, if any, to the PLC's shareholders will depend upon the outcome of the sale process which must see full repayment of the group's debt," it explained.
The underlying group operating companies are "unaffected" by the administration process, and all businesses are continuing to trade as normal, Debenhams said.
Furthermore, all relations with suppliers, employees, pension holders and customers are handled through the operating companies and therefore, Debenhams reassured that "none of these stakeholders are adversely impacted by the administration".
As such, the company expects to proceed with a proposed review of its store estate, that if approved, will significantly reduce rent costs and "underpin a sustainable future for the group".
Chair Terry Duddy 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."
"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," Duddy added.
Debanhams shares have been suspended from trading with immediate effect with their cancellation expected on Wednesday.
