Debenhams plc, the top holding company of the struggling UK department store chain, Debenhams, has gone into administration, with lenders taking control of the company after it rejected a last-minute offer of financial support from its largest shareholder, Mike Ashley’s Sports Direct.
The high-street stalwart appointed FTI Consulting as administrators on April 9, after which its operating subsidiaries were immediately sold to Celine Newco I Limited, an entity controlled by its lenders.
“The transaction delivers continuity for all group operations,” Debenhams stated. “It minimises business disruption, ensures continuity for the businesses and their suppliers and protects the group’s employees.”
“It also allows additional funding of up to £99 million to be provided.”
The company said its operating companies, Debenhams Retail Ltd and Magasin Du Nord, a Danish department store chain, will continue to trade as normal.
Although the transaction has brought to an end the four-month battle with Sports Direct’s founder Ashley, Sofie Willmott, senior retail analyst at GlobalData, said the cash injection from the new owners will not be enough to turn around the failing department store’s fortunes.
“Debenhams has indeed been rescued by lenders – though store closures are inevitable,” Willmott said. “However, the business will still require significant investment to stand a chance of regaining consumer interest.”
According to a Reuters report, Ashley said he did not intend to make an offer to buy Debenhams. But under British takeover rules, the company still has until April 22 to make a firm offer for the ailing retailer or walk away.
Inside Retail has reached out to Pepkor South East Asia, the company that launched the first Debenhams in Australia in 2016, to ask how the administration will impact its operations, but has not yet received a reply.
This story first appeared on our sister site Inside Retail Australia.