Debenhams refinancing talks advances amid Mike Ashley dispute

1909
Debenhams Australia
// Debenhams confirms it is in “advanced” talks in securing £150m refinancing deal
// Comes amid reports it has called on the CMA to intervene on possible coup from Mike Ashley
// Ashley, a major shareholder, proposed clearing Debenhams’ board & installing himself as exec

Debenhams has announced that it is in advanced negotiations to secure a £150 million lifeline from its current lenders amid growing tensions with major shareholder Mike Ashley.

In February, the embattled department store secured a short-term cash injection of £40 million after lenders agreed to extend its overdraft limit as it sought refinancing to secure its future.

Debenhams currently has £520 million in debt facilities, including £320 million of loans and £200 million of bonds which are due to be repaid next year.

In addition, in January, Debenhams said it had a net debt of £286 million.

The retailer is now understood to be within reach of a deal with lenders for a further £150 million to help shore up its finances.

Debenhams said of that total, £40 million would be used to refinance the £40 million cash injection it received last month.

Meanwhile, according to the Guardian, the department store has raised concerns with the Competition and Markets Authority (CMA) after retail tycoon Mike Ashley called for a general shareholder meeting with the aim of giving the Debenhams board a clean sweep and installing himself as an executive.

In a stock market announcement last week, the billionaire – who is the founder and majority owner of the Sports Direct retail empire – proposed that he took on “an executive role” on Debenhams’ board.

He also proposed to to remove “all of the current members of the Debenhams board”, except for finance chief Rachel Osborne.

Ashley currently has a 29.7 per cent stake in Debenhams through Sports Direct.

Debenhams had expressed “disappointment” at Ashley’s proposals.

“The board has been engaging with Sports Direct and our other stakeholders regarding options to restructure our balance sheet and is disappointed that Sports Direct has taken this action,” it stated last week.

“In the meantime, discussions to address our future funding requirements are well advanced.”

The news prompted shares in Debenhams to jump by as much as 40 per cent on Friday.

If successful, Ashley would be replaced as chief executive of Sports Direct by deputy finance chief Chris Wootton in an acting capacity.

It would also cement his position as one of the most powerful players in UK retail, having already added Evans Cycles, Sofa.com and House of Fraser – Debenhams’ key rival – to Sports Direct’s retail empire.

The firm also has significant stakes in Findel and French Connection.

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