// Debenhams secures new £50m facility with some of its existing lenders
// The funding will help department store get through the peak Christmas trading period
// The extra cash is on the same terms as a £200m loan facility announced in March this year
Debenhams has secured an extra £50 million of funding to provide it with additional liquidity and to help it get through the crucial Christmas trading period.
The struggling department store said some of its current lenders – which took control of the retailer in April in a pre-pack administration deal – had agreed to stump up the extra money on “substantially” the same terms as a £200 million loan in March.
“We are delighted that our investor consortium have reaffirmed their commitment to the business by making available additional financing support for our peak trading period,” chief executive Stefaan Vansteenkiste said in a statement.
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“We are in a strong position to continue to invest in marketing and new product initiatives as we prepare for the important Christmas season.”
The new funding is expected to be used on marketing and promoting its Christmas ranges, with bosses reportedly keen to challenge closest rival House of Fraser – which is owned by Sports Direct, a former Debenhams shareholder.
Mike Ashley, the founder and majority owner of Sports Direct, has been a constant thorn in Debenhams’ side over the past year.
He was the biggest shareholder prior to Debenhams’ collapse, with a stake of nearly 30 per cent, and had attempted to take over the business but only on the proviso he was the chief executive and that the boardroom had a clear out.
Debenhams rejected the advance, preferring to engage with a consortium of lenders – led by US hedge fund Silverpoint – which now control the business.
The new owners then launched a major CVA in May to reduce rents with its landlords, which the majority voted in favour.
However, one landlord – with the backing of Sports Direct – attempted to derail the deal by claiming in the High Court that the CVA was invalid.
A judge dismissed the claim, allowing Debenhams to continue trading and push on with its CVA.
The department store chain will operate as usual until Christmas, but by January 2020 it will shut down 22 stores and rent reductions or lease negotiations on a further 105 stores will have been sought.
After the initial batch of store closures, Debenhams will eventually close down a total of 50 of its 166 stores.
Thousands of jobs are estimated to be cut as a result of the CVA process.
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