// Debenhams’ owners are reportedly mulling sale of Magasin du Nord, its Danish business
// The sale, in its early stages, could generate between £150m-£200m for Debenhams’ owners
// Mike Ashley’s Frasers Group has reportedly its interest in buying Magasin du Nord
Debenhams’ owners are reportedly mulling a separate sale process for Magasin du Nord, the department store chain’s Danish business.
According to The Times, the early stages of an auction process is being handled by investment bank Lazard and law firm Freshfields Bruckhaus Deringer.
It’s estimated that the sale of Magasin du Nord could generate between £150 million and £200 million.
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However, The Times reported that any proceeds from the Magasin du Nord sale would likely go straight to Celine – the consortium of hedge funds that own Debenhams – rather than its core British business which is still under administration.
Debenhams has owned Magasin du Nord since 2009.
The retailer’s seven Danish stores are reportedly trading ahead of expectations.
According to The Times, Mike Ashley’s Frasers Group has renewed its interest in buying Magasin du Nord after it initially tabled a £100 million offer in the run-up to Debenhams’ first administration in March last year.
Retail Gazette has contacted both Debenhams and Frasers Group for comment.
Lazard is also conducting a sale process of Debenhams in the UK.
The investment firm has been working with the department store since July and recently asked interested buyers to submit offers by 5pm on September 1.
However, the deadline passed with no immediate resolution, with reports suggesting it was only a “checkpoint” to confirm if there was interest in a rescue deal.
Debenhams reportedly wanted to strike a deal by the end of this month otherwise it would start exploring other options, prompting speculation that the business was on a cliff edge of sorts.
In addition, last month restructuring firm Hilco Capital was drafted in to work on “contingency plans” for Debenhams, should a sale or any other rescue be unsuccessful and it falls into liquidation – a last resort that would place more than 12,000 jobs at risk.
Chairman Mark Gifford has since poured cold water on the rumours, telling BBC News last week that Debenhams was far from the brink of collapse and insisted that trading has been better than expected since lockdown ended.
He added that Debenhams has more than £95 million in the bank – more than £50 million higher than it had expected to have at this point when it went into administration in April.
Gifford also stressed that Debenhams was in no rush to reach a deal by the end of this month, although he conceded that it was likely the retailer would remain in administration until early next year.
There has been no confirmation as to who or what businesses have expressed interested taking over Debenhams in part or as a whole, but speculation has been rife that Next, Fraser’s Group, and a Chinese consortium have all mulled the opportunity.
Even if a sale is agreed, one of the potential scenarios reportedly being discussed by buyers is liquidating more than half of Debenhams’ store estate – leaving it with 60 sites – due to an unlikeliness of bidders wanting to take on the entire business as it currently stands.
When Debenhams entered administration at the height of the coronavirus lockdown in April, it marked the second such insolvency process within a year.
However, this time it’s a “light touch” administration, meaning directors are still running the retailer rather than handing it all over to the administrators.
Debenhams permanently shut down 20 stores and slashed an estimated 6500 jobs since the pandemic gripped the UK in March – 2500 of which was confirmed just last month.
In months leading up to the lockdown, Debenhams had around 140 stores and was in the midst of a CVA restructure, which it launched soon after the first administration.
The CVA led to several store closures immediately after the peak Christmas trading season.
Debenhams now trades from 124 stores in the UK, plus another 45 sites across 17 countries in Europe, the Middle East and Asia under various franchise agreements.
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