Debenhams placed into administration after Mike Ashley deal rejected
Lenders have seized control of Debenhams after the company was placed into administration.
The move wipes out the stake held by Sports Direct tycoon Mike Ashley in the business, and those of all other shareholders.
It follows Mr Ashley’s successive bids to take over the business were rejected. An emergency shareholder meeting in which he was to seek his appointment to the board and attempt to oust most other directors, has now been cancelled.
The company’s debts will now be reduced and it will be able to continue trading as normal, ahead of a wider restructuring which will see around 50 stores closed. The pension plans of its staff are protected, Debenhams said.
The company’s chairman, Terry Duddy, said: “It is disappointing to reach a conclusion that will result in no value for our equity holders.
“However, this transaction will allow Debenhams to continue trading as normal; access the funding we need; and proceed with executing our turnaround plans, whilst deleveraging the group’s balance sheet.
“We remain focused on protecting as many stores and jobs as possible, consistent with establishing a sustainable store portfolio in line with our previous guidance.”
Sports Direct’s Mike Ashley has been keen to take over full ownership of the business. As late as Tuesday morning he renewed his bid to do so, but this further offer was rejected.
Debenhams said in a statement: “The board confirms that it received a revised, highly-conditional, proposal from Sports Direct in the early hours of April 9, 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.”
Mr Ashley’s attempts to take control of Debenhams had become increasingly desperate, and over the weekend the businessman demanded the board be investigated, two members to undergo lie detector tests and trading in its shares to be suspended.
Sports Direct added on Tuesday it is continuing to “actively evaluate” a conventional takeover, priced at 5p per share.
News Source: ITV News