Debenhams shareholders may face wipeout in restructuring
* Some restructuring options mean no equity value
* Seeking 200 mln stg of additional funds from lenders
* Biggest shareholder Sports Direct wants control of company
* Sports Direct offers to buy Debenhams' Danish chain
* Debenhams shares down 44 pct
(Adds Debenhams response to Sports Direct proposal)
LONDON, March 22 (Reuters) - Struggling British department
store group Debenhams said on Friday its shareholders
could be wiped out as a result of some of the restructuring
options it is considering and rebuffed a bid by Sports Direct to
buy its Danish business.
Debenhams has issued a string of profit warnings and lost 90
percent of its market value in the past year. The company is
trying to fend off an attempt by its largest shareholder, Mike
Ashley's Sports Direct, to take control of the business.
On Friday, Debenhams said it was seeking 200 million pounds
($262 million) of additional funds from lenders, allowing it to
pursue restructuring options to secure its future.
But the retailer said "certain of these options – if they
materialise – would result in no equity value for the company's
Its shares were down 44.4 percent at 1.73 pence at 1240 GMT,
valuing the business at just 20 million pounds. Its net debt at
Jan. 5 was 286 million pounds.
Last week, Sports Direct offered Debenhams a 150 million
pound loan and on Friday said it had offered to buy Debenhams'
Danish business Magasin Du Nord for 100 million pounds.
As with Sports Direct's previous offers of assistance, it
came with conditions - that Ashley becomes CEO of Debenhams.
Debenhams said that Magasin was a key part of the group and
that Sports Direct's proposal wouldn't address the company's
funding and restructuring requirement.
It also said there were concerns about Ashley becoming CEO
as Sports Direct owns competitor House of Fraser.
"The board has remained open to engagement with Sports
Direct throughout its refinancing process and has provided clear
guidance on what would represent workable solutions," Debenhams
said in a statement.
"This guidance has been repeatedly ignored by Sports
On Thursday, Sports Direct, which owns nearly 30 percent of
Debenhams' shares, requisitioned a meeting of the department
store group's investors, with the intention of removing all
current board members other than Chief Financial Officer Rachel
A Sports Direct executive told the Financial Times this week
it would seek to buy Debenhams if the department store chain did
collapse into administration.
Analysts expect Debenhams' restructuring to include an
acceleration of its store closure plan and see a so called
pre-pack administration as an option.
Debenhams said it was seeking agreement from bondholders to
change the terms of some of their bonds as part of the process
to secure the new loans of up to 200 million pounds from
It had previously said it was working on a plan to raise an
additional 150 million pounds.
Debenhams has launched a "consent solicitation" for holders
of its 5.25 percent senior notes due 2021. This process seeks
consents from bondholders to certain amendments to the existing
A successful consent solicitation would allow Debenhams to
enter into the new loan facilities.
($1 = 0.7630 pounds)
(Reporting by James Davey, additional reporting by Alistair
Smout, Editing by Jane Merriman and Elaine Hardcastle)
First Published: 2019-03-22 11:11:45
Updated 2019-03-22 15:01:42
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