FT28 Mar 2019 18:49
Financial Times
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Debenhams PLC
Debenhams bondholders back retailer’s refinancing plan
Move is a blow to Mike Ashley’s moves to take over the retailer
© Reuters
March 28, 2019 9:47 am by Myles McCormick in London
Debenhams has secured the support of its bondholders for a series of technical changes that help clear the way for a refinancing and restructuring plan, dealing a blow to a potential bid for the struggling retailer by Sports Direct chief executive Mike Ashley.
Debenhams last Friday issued a “consent solicitation notice” — a formal request to holders of its unsecured bonds to vary the terms of the notes so it can put in place up to £200m of secured funding.
It said on Thursday that a majority of bondholders had “provided consent to the amendments sought”, putting it in a position to confirm the new funding in the coming days and move to pursue restructuring options to secure the future of the business
The announcement will come as a blow to Mr Ashley and Sports Direct, which on Wednesday said it was considering making a £61m offer for the group, which was conditional on Debenhams terminating the consent solicitation process.
Chris Wooton, Sports Direct’s deputy chief financial officer, previously acknowledged that the company “would struggle” to influence the outcome if the changes that Debenhams was seeking from its creditors are obtained, because they would result in creditors having more security over the group’s assets.
Thursday’s announcement helps clear the way for a restructuring of the company’s balance sheet, which could happen either through a debt-for-equity swap and share issue, which would be heavily dilutive for shareholders, or a “pre-pack” administration in which the company’s lenders would take control of the business and equity investors would be wiped out altogether.
This would hurt Sports Direct, which owns a 29 per cent stake in the group.
Separately, Debenhams said on Thursday it had agreed to give up the lease on its London headquarters at Regent’s Place and move its central functions to its flagship store in Oxford Street as part of its cost reduction drive.
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