Apr 9, 2019

Debenhams on brink of administration after rejecting offer

The department store group said in a statement that it had "Received a revised, highly-conditional proposal from Sports Direct in the early hours of April 9" but that the company's lenders concluded that the offer "Was not sufficient to justify an extension to the April 8 deadline". On that basis, it added that the remainder of the £200m of new funding agreed with its lenders last month would only be made available "Upon transfer of those [operating] subsidiaries into the ownership of a lender-approved entity". That was seen as a reference to plans for a pre-pack administration that would result in no remaining equity value for shareholders. In a separate statement, Sports Direct said it had increased its underwriting offer to £200m and reduced the proposed amount to be written off by lenders to £82m, from an earlier £148m. Like all its previous proposals, the revised underwriting offer was conditional on Sports Direct founder Mike Ashley being appointed chief executive of Debenhams - a move that the company's board and its lenders have repeatedly rejected. Sports Direct, which owns 29 per cent of the department store group, called upon the board of Debenhams to help find "a solvent solution" which it said would be in the best interests of all stakeholders.

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