Mar 22, 2019

Debenhams shareholders could lose investments under refinancing plans

Debenhams has publicly warned for the first time that some of the refinancing options it is considering could result in existing shareholders losing all their investment. The struggling department store group, which is trying to refinance its debt and restructure its estate, said that "Certain options - if they materialise - would result in no equity value for the company's current shareholders." The group's shares promptly fell by over three-fifths to just over a penny. Sports Direct, Debenhams' biggest shareholder with a 29 per cent stake, has put forward an alternative proposal that entails lending the group £150m interest-free and with no security, but only for a year. The offer is also conditional on Mike Ashley, Sports Direct's founder and chief executive, being installed as chief executive of Debenhams for an as-yet undetermined period. Mr Ashley has been a vocal critic of the group's strategy and management, and yesterday resubmitted a request for an extraordinary meeting of shareholders to dismiss all the board except finance director Rachel Osborne.

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