Shop Direct owner Mike Ashley has labelled his defeat in the fight for ownership of the department store chain a ‘national scandal,’ as its new owners now draw up plans to close more than 50 stores.
The plans, busy being drawn up last night, put at risk some 4,000 jobs as the 206 year old retailer fell into the hands of its lenders yesterday morning.
The pre-packaged deal with administrators sees stores trading as normal for the time being, but wipes shareholders’ stakes in the company, including Ashley’s own pot of some £150 million.
The new ownership consortium is led by hedge funds Silver Point Capital and Golden Tree, which built strong positions by buying up Debenhams’ bond debt. Ashley’s 30 per cent stake, acquired by Sports Direct at a cost of £150 million, has been wiped out – as has the rest of the equity.
The retail chain is now going ahead with a financial restructuring known as a company voluntary arrangement that enables the firm to seek rent cuts and close unwanted stores.
Debenhams chairman, Terry Duddy has said that the firm ‘remains focused on protecting as many stores and jobs as possible, consistent with establishing a sustainable store portfolio in line with its 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.”
Debenhams has already said that it needs to close 50 stores. The first closures would come after Christmas, providing a deal with landlords can be struck.
Mike Ashley has said that “a full, better and appropriate solvent solution can be found,” adding that “this solution would include allowing myself and appropriate senior Sports Direct management access to detailed information to save the business for all stakeholders.
“The board of Debenhams and its advisers have sought to stifle and exclude us from their so-called process and have undermined and blocked our various offers of assistance as they carried out their underhand plan to steal from shareholders.”
Chris Wootton, Sports Direct’s deputy chief financial officer has said that the firm was considering legal action against Debenhams’ board over shareholders’ losses.