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Future of Cambridge Debenhams uncertain as company falls into hands of lenders


By Gemma Gardner


High street retail giant Debenhams has this morning called in administrators - but said stores will continue to trade as usual.

The Grafton Debenhams, sourced by Coverdale Barclay. (8389158)
The Grafton Debenhams, sourced by Coverdale Barclay. (8389158)

It comes after a prolonged bid by Sports Direct to take control of the company.

It had two offers rejected over the last 24 hours to pump up to £200million into the ailing firm.

A store closure programme is now likely to be implemented - although no details of which stores have been revealed yet

But the directors have now opted to take the firm into administration. Shares in the firm were suspended this morning.

The pre-pack administration process means the group will be taken over by Debenhams' lenders.

As a consequence, it will have access to £200m in additional funding.

It says it will now continue with the "restructuring of its operations" which will include "optimising its store portfolio". That is likely to mean the implementation of around 50 store closures.

It is not known if any of the Cambridge outlet will be affected. The firm has a branch in the Grafton Centre.

Terry Duddy, Debenhams’ chairman 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, while 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.

“In the meantime, our customers, colleagues, pension holders, suppliers and landlords can be reassured Debenhams will now be able to move forward on a stable footing.”

The move will mean existing shareholder will receive nothing for their holdings. Most prominent is Sports Direct boss Mike Ashley.

He held a 29 per cent stake in the company which he had invested some £150m in building up.

“In the meantime, our customers, colleagues, pension holders, suppliers and landlords can be reassured Debenhams will now be able to move forward on a stable footing.”

He had wanted to invest in the company on the proviso he would become CEO – a move rejected by the retailers’ board.

Chad Griffin, Simon Kirkhope and Andrew Johnson of FTI Consulting LLP were appointed as joint administrators and the company’s shares are now held by Celine UK Newco – an entity owned by a number of the company’s secured lenders.



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