UK’s Debenhams falls into administration
By Kate Holton and Paul Sandle - Apr 9th, 14:47
Debenhams’ lenders took control of the ailing British retailer after it went into administration, wiping out shareholders including billionaire Mike Ashley in the latest corporate failure on the high street.
Once the biggest department store chain in the UK, Debenhams has been battling with a sharp slowdown in sales, high rents and ballooning debt, plus an acrimonious battle with its largest shareholder, Ashley’s Sports Direct.
While its stores will keep trading, the appointment of administrators marks the latest corporate failure in the British retail sector after House of Fraser, electronics firm Maplin and cycle shop Evans all struggled to stay afloat.
Administrators from FTI Consulting immediately sold Debenhams’ holding company to a new entity owned by its lenders. Contracts with stores, staff and suppliers were held by its operating companies and will not be affected, it said.
The announcement marks defeat for the retail billionaire Ashley, who has spent months battling to wrest control of the business, offering a rescue plan that came with the condition he was appointed CEO.
“It is disappointing to reach a conclusion that will result in no value for our equity holders,” chair Terry Duddy said. “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.”
Despite its long history, Debenhams has been battling for survival after a consumer shift online and to cheaper outlets destroyed 90% of its share value in the past year. It currently has debt facilities worth £720m and a market valuation of £22m. Business Live
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