Debenhams shares SUSPENDED: Retailer on brink of ADMINISTRATION as rescue bid REJECTED
The UK’s largest department store chain has requested its shares be suspended from trading with immediate effect, pending a further update. Shares were suspended by The Financial Conduct Authority “at the request of the company” at the open of the London Stock Exchange. It comes after billionaire business tycoon Mr Ashley made a revised £200 million rescue offer for Debenhams, after his initial £150 million bid was rejected on Monday. Under the latest proposal, which would effectively delay the 240-year-old department store’s likely administration, Debenhams’ lenders would have to agree to write off £82 million of its £720 million debt.
Part of the rescue bid also included making Mr Ashley its new chief executive.
But the cash injection was turned down by lenders to Debenhams, who deemed the latest bid “not sufficient”.
Debenhams said in a statement: “The board confirms that it received a revised, highly-conditional, proposal from Sports Direct in the early hours of 9 April, which indicated a willingness of Sports Direct to underwrite an equity issue of £200 million.
“The company’s lenders have confirmed to the company that the proposal, on the terms set out, was not sufficient to justify an extension to the 8 April deadline.
The company anticipates making a further announcement during the course of the day following further discussions with its lenders
“The company anticipates making a further announcement during the course of the day following further discussions with its lenders.”
Debenhams is now feared to be on the brink of administration, with store closures and job losses widely tipped to follow should lenders seize control of the company.
Shareholders such as Mr Ashley’s Sports Direct, which holds a 30 percent stake, would see their investments wiped out if the department store chain collapses.
Shares were worth 1.83p at the close of the London Stock Exchange on Monday.
An update from Debenhams is expected later today.
Sports Direct said on Tuesday that it is continuing to “actively evaluate” a conventional takeover, priced at 5p per share.
After rejecting the offer, Debenhams now remains on course to plunge into a pre-pack administration.
It would come ahead of a wider restructuring which will see around 50 stores close via a Company Voluntary Arrangement.
It will also see a £200 million refinancing plan, announced in March, go ahead.
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