Debenhams in advanced talks on financing as it seeks to keep Ashley out
Debenhams issued a very short statement on Monday saying that it was in talks on its financing needs. But it spoke volumes in terms of the retailer’s determination to rebuff attempts by major shareholder Mike Ashley to take control of the company.
“Further to the announcement made on 5 March, Debenhams confirms that it is in advanced negotiations with its current lenders about additional facilities of approximately £150m,” it said. “£40m of these facilities will refinance the £40m bridge facility announced on 12 February. A further announcement will be made in due course.”
The company’s shares rose on the news, although given that they’re currently slumbering at just 3.62p each, that was hardly anything to shout about.
The financing talks aren’t only about securing a much-needed lifeline for the company. They’re also part of the process by which it's trying to fend off the prospect of Mike Ashley being in charge.
The Monday announcement came just a few days after Ashley had called for almost the entire Debenhams board to be replaced and said he aimed to step down from his role as CEO of Sports Direct in order to take an executive role at the company.
Debenhams has net debt of around £300m but needs to put its finances on a firmer footing in order to guarantee its future.
It’s currently headed by acting chairman Terry Duddy, who formerly ran Home Retail when it owned Argos and Homebase. Debenhams CEO Sergio Bucher remains in his role, although he is no longer on the board.
One factor that Debenhams has in its favour in its battle to keep Ashley out is that, while he would be prepared to step down as CEO of Sports Direct, he’s also in charge of House of Fraser. There’s scepticism over his ability to turn around Debenhams based on the lack of progress at HoF so far, with reports that the latter continues to lose market share.
That said, newspapers have reported that a board role for Ashley at Debenhams isn’t out of the question, especially given that he controls close to a third of the firm’s shares.
The Daily Telegraph also reported that Debenhams' bondholders had rejected a push by Ashley to run the firm just days before he went public with his plan late last week.
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