Debenhams is Saved, But Might Still Have to Sell to Sports Direct

By Holly Brockwell on at

Good news for anyone who likes to buy makeup, sweets, fancy clothes and cast-iron pans all at the same time: Debenhams has figured out a refinancing deal with its lenders, and won't have to close.

The deal is worth £200m and means salvation for a lot of its employees, but not all of them -- the department store is still planning to close some branches.

Now that it's got a bit more runway, Debenhams has time to work out what it's going to do to become viable again. Mike Ashley of Sports Direct fame has been gleefully filling his oversized mug with stricken high street chains, and has made no secret of his desire to add Debenhams to his catch.

Chairman Terry Duddy comments:

"We are pleased to have agreed this comprehensive funding package which secures the future of the Debenhams business.

We have also preserved a route for our shareholders to participate in the future of the business, but this requires the support of our major shareholder."

That major shareholder is... Sports Direct, which owns 29.7% of the company.

The chain can access £101m of the lifeline money now, but the other £99m depends on what happens next. Sports Direct can either make a firm offer for the business (its overtures have all been rejected so far -- we can relate) or provide another cash injection (and stop trying to get rid of almost the entire company's board). If neither of those things happen, Debenhams' lenders will have to take over, and the rest of the cash will be made available to them.

If that happens, the company will likely lose its equity for current shareholders.

All this means that while Debenhams has managed to avoid the Mike Ashley route thus far, there doesn't look like a good way forward for the chain that doesn't involve Sports Direct.

Nevertheless, for now, you can still hit up your local Debenhams and get sprayed in the eye by a perfume tester you didn't ask for. Hooray! [BBC]

Main image: Martin Pettitt via Flickr CC