Published: Tue, April 09, 2019
Markets | By Otis Pena

Mike Ashley slams Debenhams administration as 'national scandal'

Mike Ashley slams Debenhams administration as 'national scandal'

The latest proposal from Mr Ashley would have been subject to Debenhams creditors agreeing to write off £148m in debt.

Debenhams later requested its shares be suspended with immediate effect pending a further update.

The retailer's lenders have now taken control of the company.

This afternoon it confirmed it had gone into administration.

Earlier today, the high street chain fell under the control of its lenders after rejecting a £200million lifeline offer from Sports Direct.

Debenhams said in a statement: "The board confirms that it received a revised, highly-conditional, proposal from Sports Direct in the early hours of 9 April, which indicated a willingness of Sports Direct to underwrite an equity issue of £200 million".

Its new owners, including hedge funds led by Silver Point, are expected to carry out a restructuring including a company voluntary arrangement (CVA) to cut back on the group's rent bill and the closure of loss-making stores after Christmas.

It means all of its 165 stores will continue trading as normal for now - but this has not allayed fears that outlets will be shut and jobs will be lost in the near future.

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Administrators at FTI Consulting were appointed to the retailer at just before 10am on Tuesday and immediately sold the group's operating companies to a new entity owned by its lenders.

Chairman Terry Duddy said it was "disappointing" that existing shareholders would be wiped out by the process.

The billionaire's Sports Direct International company said Debenhams turned down a proposal to issue £150m in new shares, as a deadline for talks with creditors looms.

"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".

In April previous year, the company announced an 84.6 per cent drop in its pre-tax profits, blaming the "Beast from the East" for disturbing much of the footfall.

After rejecting the offer, Debenhams now remains on course to plunge into a pre-pack administration.

The administration is another blow to a retail sector already reeling from the collapse of BHS, electronics firm Maplin, department store House of Fraser and cycle shop Evans.

This is despite Debenhams being the largest traditional department store chain in the UK.

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