Latest: Debenhams has been placed into administration and the retailer’s lenders have seized control of the company.
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 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.
In the meantime, our customers, colleagues, pension holders, suppliers and landlords can be reassured that Debenhams will now be able to move forward on a stable footing. I would like to thank them all for their recent and continuing support.
A spokesman for the Debenhams Pension Schemes said: “Debenhams Retail Limited has been transferred to a newly-incorporated company and continues to trade and operate as normal. Members can therefore be reassured that the schemes are carrying on as usual.
“The trustees have worked with our specialist advisers throughout the process of the company’s refinancing and restructuring, to ensure that members’ interests are taken into account and we have consulted closely with The Pensions Regulator and the Pension Protection Fund at every stage.
“We are in the process of writing to all members with further information and we will continue to keep them informed.”
Earlier: Mike Ashley weighs in with desperate rescue offer for Debenhams
Mike Ashley’s Sports Direct has made a revised £200m rescue offer for Debenhams, delaying the department store’s likely administration.
The offer involves underwriting a rights issue which would see existing investors buying newly issued shares and is an advance on an £150m plan tabled on Monday, which was rejected.
Under Mr Ashley’s latest proposal, Debenhams’ lenders would have to agree to write off £82 million of its £720 million debt mountain, as well as install the tycoon as chief executive.
Lenders to Debenhams said the latest proposal, on the terms set out, was “not sufficient”
Debenhams said in a statement: “The board confirms that it received a revised, highly-conditional, proposal from Sports Direct in the early hours of 9 April, 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.
“The company anticipates making a further announcement during the course of the day following further discussions with its lenders.”
£720m Debenhams’ debt mountain
Debenhams is now widely expected to fall into administration and the retailer’s lenders seize control of the company in a move tipped to trigger store closures and job losses.
Shareholders such as Mr Ashley’s Sports Direct, which holds a 30% stake, will see their investments wiped out.
The pre-pack administration undertaken by the struggling department store chain will see its debt reduced and comes ahead of a wider restructuring which will see around 50 stores close via a Company Voluntary Arrangement.
It will also see a £200m refinancing plan, announced in March, go ahead.
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 that it is continuing to “actively evaluate” a conventional takeover, priced at 5p per share.