Debenhams has entered pre-pack administration and gone into the control of its lenders following the department store’s rejection of Sports Direct’s offer to underwrite £150m equity issuance, appointing FTI Consulting as administrators.
Chad Griffin, Simon Kirkhope and Andrew Johnson of FTI Consulting LLP were appointed as joint administrators while Debenhams’ shares were sold to Celine UK Newco I Limited, an entity owned by the company’s secured lenders.
The pre-pack administration will see all of the company’s shareholders – including Sports Direct which has a 30% stake – wiped out and lose their investments.
Although Debenhams previously announced plans to close 50 of its stores, its 166 outlets will continue trading as normal. The company employs around 25,000 people. The administration will allow the company to sell itself without affecting the running of the business. It also allows additional funding of up to £99m to be provided.
Debenhams said the administrators concluded that the transaction was in the “best interests of the plc’s creditors”, and furthermore “minimises business disruption and provides ongoing access to funding, ensuring continuity for the group’s operating businesses, lenders, suppliers, employees, pension holders and customers”.