Debenhams has secured a £200m funding injection as the business battles to secure its future amid the overtures of Sports Direct.
The embattled department store chain has struck a deal with its existing lenders and noteholders, which it said would “provide liquidity headroom” and “deliver stability for its customers, staff, suppliers and pension holders”.
Debenhams said the deal would give it the “ability to pursue restructuring options to secure the future of the business” and said ”certain of these options” would “result in no equity value for the company’s current shareholders”.
The new facility of up to £200m is larger than the £150m funding Debenhams previously said it was seeking – and will help the chain fend off the pressure being applied by Mike Ashley’s Sports Direct, which owns a near 30% stake in the business.
Sports Direct today made a £100m cash offer for Debenhams’ Danish business Magasin Du Nord, on the condition that Ashley is appointed as chief executive of Debenhams.
As the battle between the two businesses rages on, Sports Direct said it made the offer “in order to assist” with Debenhams’ “short term liquidity requirements”.
But Debenhams rebuffed the bid, arguing the proposal “does not address the company’s funding and restructuring requirement” or balance the interests of all stakeholders.
Debenhams said: “Magasin is a key part of the Debenhams group, is cash flow generative and a meaningful contributor to group profits. As such, Magasin is an important part of any lending proposition and therefore any broader solution that protects value for the group.”
The retailer added that there were “obvious concerns” about Ashley becoming its boss, given that his SportsDirect business owns rival House of Fraser.
It comes as Ashley continues to apply pressure on the embattled department store chain. He has already ousted former chairman Sir Ian Cheshire and chief executive Sergio Bucher from the Debenhams board, although the latter continues in his role.
Sports Direct has called a meeting with Debenhams shareholders in a bid to oust every member of its board, with the exception of new finance boss Rachel Osborne, and install Ashley as chief executive.
Ashley also offered the business an interest-free £150m loan, in exchange for an additional 5% shareholding in the company, earlier this month as Debenhams scrambled to secure fresh funds.