For Sale: Debenhams Hunts for New Owner While Shopping Giant City Brings in Big Hitters to Finish Deal in Late September
- London investment bank Lazard will be appointed tomorrow
- A sale is one of the many options on the table for the company
- Debenhams engaged administrators for the second time in a year in April
Debenhams is poised to raise consultants to secure her future in a move that would allow the department store giant to be sold to new owners.
London investment bank Lazard will be appointed tomorrow to lead the process and initiate talks with potential buyers.
The beleaguered chain’s lenders are investigating ways to make Debenhams more stable after calling on administrators for the second time in a year in April.
A sale is one of the many options on the table for Debenhams
A sale is one of the many options on the table for the company, which also owns the Danish department store Magasin du Nord.
Other options include attracting new investors alongside existing financiers or initiating a restructuring of the company known as a ‘voluntary business plan’ (CVA) – an insolvency mechanism that would mean that creditors will be hit financially as they strive to make the company healthy again.
Sources said the existing supporters wanted to reach a conclusion on the next steps in the coming weeks and that the process wanted to be ‘finished and finished’ by the end of September.
“Lazard will work closely with the manager to find a positive, resolving outcome that works for all creditors and that would draw a line below the current situation,” said a source.
The Mail on Sunday understands that the plan has been charted in recent weeks with key creditors – U.S.-based Silver Point Capital, Alcentra, GoldenTree and UK bank Barclays – as well as chain managers at FRP.
Law firm Freshfields is also one of the City firms advised on the process.
Sources suggested that the September target is related to a series of important decisions about clothing inventory orders that the company’s buyers should make in time for January.
FRP conducts what it has described as a ‘light touch’ administration, but has seen all of its Irish stores go into liquidation.
Reportedly, a main chain liquidation is not out of the question if all other options are exhausted and the manager believes that the best way to return cash to creditors. But sources said that creditors were not hungry at the moment, and the preferred option would likely focus on financial restructuring.
Mike Ashley, who owns rival chain House of Fraser, can offer some or all of the chain
The chain opened 124 of its 142 stores last month when restrictions on retail stores began to ease in the UK five weeks ago.
Many shopping streets have reported a moderate customer response. But it is understood that sales at many Debenhams stores performed better than expected.
Selling online may be another option for future business owners.
A Chinese consortium is believed to be among potential investors who have already emerged. However, sources maintained that it was “very early in the process” and that Lazard had not yet been officially appointed.
Other likely bidders for part or all of the chain include billionaire Newcastle United owner Mike Ashley, who owns rival chain House of Fraser and sportswear retailer Sports Direct.
He clashed with previous management in his attempts to take control of the company and attempted to install himself on senior management of the company at least twice in senior positions – including chairman and CEO.
Next’s director, Lord Wolfson, has also looked at some Debenhams sites in recent months
“I’m sure Mike will somehow show up during this process,” a source said of Ashley.
Next’s director, Lord Wolfson, has also looked at some Debenhams sites in recent months.
Debenhams currently does not pay rent and benefits from government holiday rates, which last until April. Reportedly, many of the headquarters employees are still fired.
Management has renegotiated many of the chain’s leases into revenue-related rents, which would appeal to any buyer.
At its peak, Debenhams had approximately 175 stores with sales in excess of £ 2 billion.
But it didn’t change online as quickly as some of its rivals and left expensive leases – a hangover from its private equity property 14 years ago – as its fortune declined.
It was pulled from the stock market last year when it plunged into administration and creditors seized power.
The coronavirus pandemic has blind stores and many believe it will accelerate the shift online.