RE: FT news!3 Feb 2019 08:49
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Debenhams is pushing to restructure its property portfolio ahead of a quarterly rent date in March, as it struggles with a sharp deterioration in its finances.
The 200-year-old department store chain is in refinancing negotiations with its lenders, but is also drawing up documents for a company voluntary arrangement — an insolvency deal that includes restructuring leases — which could take place in the next few weeks, said three people familiar with the plans.
With dwindling headroom on its £520m of borrowing facilities, a fresh announcement on the refinancing talks is expected next week. Debenhams declined to comment.
Debenhams is believed to be keen to push forward with the CVA ahead of the March 25 quarterly rent date, when rents on many stores come due. But to do this it requires evidence from its lenders that it would face insolvency without a cut to its lease obligations.
The company announced a record loss of £491.5m for the year to September and said it would close up to 50 stores, putting thousands of jobs at risk. It has since held discussions with landlords about changes to its leases, which in some cases stretch as far as 2083.
Many of the group’s weakest stores are owned by individual private landlords, but a restructuring of the group’s property portfolio would also affect listed groups and large fund managers. British Land, Intu, Landsec and Aberdeen Standard are among the groups exposed to Debenhams.
Any store closures would have knock-on effects for retail destinations as department stores are generally the “anchor” tenant in a shopping centre or retail park.
Last month Mike Ashley, the founder of Sports Direct, which owns a 29 per cent stake in the department store chain, ejected Debenhams’ two most senior directors from the board.
In the autumn Debenhams brought in advisers from KPMG to help assess its options.
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