Debenhams presses ahead with restructuring after Ashley-backed challenge fails
Debenhams is to press ahead with its financial restructuring after a legal challenge to the plans backed by the retail tycoon, and former Debenhams shareholder, Mike Ashley failed.
The struggling department store chain was acquired out of administration by a consortium of investors, Celine Jersey Topco, last year in a move which wiped out Mike Ashley's near 30% shareholding. Ashley, chief of the Frasers Group, has previously attempted to wrest control of the business himself.
Debenhams then entered a CVA agreement to allow it to close stores (some 22 have closed so far) and financially restructure. In a move backed by Ashley – who was himself prevented from making a legal challenge – a Salford-based landlord, which owned six Debenhams properties, sought to challenge the CVA.
That challenge has now been dismissed, which leaves the company free to enact a financial restructure, which will result in at least £100m of its £600m debt being swapped for equity.
Debenhams CEO Stefaan Vansteenkiste said: “This is great news for Debenhams. We can put the distraction of this litigation behind us and proceed with our plans to turn the business around. With committed investors, a strengthened board and a restructured balance sheet we have the platform from which to rebuild a sustainable business.”
It has been a torrid time for department stores. Mike Ashley acquired House of Fraser our of administration in August 2018 and has faced a battle to stabilise the business. He had hoped to merge the chain with Debenhams, but is now focusing on a strategy to "elevate" some House of Fraser's branches into new premium Frasers offerings.
Recently, privately owned department store chain, Beales, which operated 23 stores across the South and East of England, collapsed.