Debenhams considers sale as part of administration exit plan

Debenhams

Debenhams has this weekend appointed investment bank Lazard to oversee a potential sale process as the struggling retailer explores ways to exit its current state of administration.

The department store chain entered what it described as a “light touch” administration in April, handled by FRP Advisory but with the company’s directors still in place, to protect the business during the height of the COVID-19 crisis.

This was Debenhams’ second administration in a year. The previously listed company was placed into administration – and delisted – in Spring 2019 and was subsequently acquired by a consortium of its investors, Celine Jersey Topco, which included Silver Point Capital and GoldenTree Asset Management.

It then entered a CVA process to negotiate store closures, with 19 stores closed in January, and to seek rent reductions throughout the rests of its estate.

Further negotiations were carried out with landlords during lockdown and Debenhams has managed to re-open 124 of its 142 stores. In a statement, published by The Guardian, it said that the time was now right to look for options to exit its administration and that a sale of the business was one of a number of possible outcomes.

“There are a range of possible outcomes which could include the current owners retaining the business, potential new joint venture arrangements (with existing and potential new investors) or a sale to a third party, and the administrators will be guided by what delivers the best outcome for creditors,” it said.

Debenhams has already liquidated its Irish arm and has made around 1,000 redundancies at its head office

Frasers chief Mike Ashley had owned nearly 30% of Debenhams while it was listed and had fought a bitter battle to try to wrest control of the business himself before it was placed into administration in 2019, a move he described as a “national scandal”. Ashley had wanted to merge the chain with the House of Fraser group, which he had previously acquired out of administration.