Debenhams sold in pre-pack administration
High street department chain Debenhams has gone into administration in a pre-pack as lenders take over control of the group following the appointment of FTI Consulting LLP, putting more high street jobs at risk
9 Apr 2019
The joint administrators of Debenhams (the Company) are Chad Griffin, Simon Kirkhope and Andrew Johnson of FTI Consulting LLP. Immediately following their appointment, the joint administrators sold the Company’s shares in the Group, to Celine Newco I Limited, an entity owned by some of the secured lenders.
The new owners will restructure the operation, including review the existing store portfolio with a view to closing some stores, improving trading performance and reducing the debt burden on the business.
Trading in the shares of the plc were suspended this morning and will be cancelled with effect from 8am on 10 April 2019, seeing shareholders wiped out.
Debenhams is the latest in a line of high street behemoths to struggle in the face of stiff price competition from online retailers, the legacy nature of huge high street stores, and lack of modernisation, investment and innovation to meet a changing retail demographic. BHS went into administration and closed all its stores in 2017 when Arcadia chairman Philip Green put the store chain into administration, while House of Fraser was rescued by Sports Direct's CEO Mike Ashley, although a number of stores have been closed following the acquisition. Ashley did try to put together a rescue package for Debenhams but this was rejected.
With a heritage dating back to 1778 Debenhams has 166 UK stores and is the largest traditional department store chain in the UK. It also has an online business, and international stores in Denmark, the Middle East and the Republic of Ireland.
The prepack transaction will see business continuing as normal for the time being with a £99m influx of immediate funding with trading continuing as normal for the time being.
Terry Duddy, Debenhams' chairman, 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. We remain focused on protecting as many stores and jobs as possible, consistent with establishing a sustainable store portfolio in line with our previous guidance.
‘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.’
Only the plc (which was the Group’s top holding company) is in administration – other group operating companies, including Debenhams Retail Ltd and Magasin Du Nord, continue to trade as normal. The Group’s commercial relationships with suppliers, employees, pension and customers are all with the operating companies.
Further information during the Company’s administration will be available on the FTI Consulting LLP creditors portal
Report by Sara White