Debenhams in talks over borrowing £150m as Mike Ashley circles

Debenhams has confirmed it is in advanced talks to borrow £150 million as part of efforts to stay afloat, just days after Mike Ashley launched an aggressive bid to seize control of the retailer.

Monday, 11th March 2019, 10:33 am
Updated Monday, 11th March 2019, 11:35 am

The struggling department store chain said on Monday that it is in negotiations for the funds, £40 million of which will go towards refinancing a bridging loan secured in February.

The retailer is struggling under a £500 million-plus debt mountain which it is also trying to refinance, with a debt-for-equity swap or rights issue on the cards.

Part of its plans include the closure of 50 stores, potentially through a Company Voluntary Arrangement (CVA).

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The latest twist in the saga comes after Sports Direct boss Mr Ashley called for a clean sweep at the top of Debenhams and proposed installing himself as an executive.

Mr Ashley tabled a proposal on Thursday night for a shareholder meeting to remove “all of the current members of the Debenhams board”, other than finance chief Rachel Osborne.

Mr Ashley owns just under 30% of Debenhams through Sports Direct.

If his plans are successful, he would step down from his position as chief executive of Sports Direct, though would retain his controlling 60% stake in that company.

The shock announcement came just days after Debenhams issued its latest profit warning.

It warned that trading headwinds, efforts to put the group on a secure financial footing and macroeconomic uncertainties are hitting the company hard. The profit alert was the fourth in just over a year.

Shares were up more than 2% in morning trade on Monday at 3.63p.