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Debenhams on brink of administration | |
(31 minutes later) | |
Debenhams is on the brink of administration after it rejected a new offer from Sports Direct, made in the early hours of Tuesday, to pump £200m into the department store. | |
Its shares were suspended just before the start of Tuesday's trading, after a request from the company. | |
On Monday, Debenhams turned down a similar proposal from Mike Ashley's company to put £150m into the retailer. | On Monday, Debenhams turned down a similar proposal from Mike Ashley's company to put £150m into the retailer. |
The new offer was rejected because Mr Ashley wanted to be chief executive. | |
The new offer from Sports Direct would have seen the company underwrite the raising of £200m by issuing new shares, higher than its previous proposal. | The new offer from Sports Direct would have seen the company underwrite the raising of £200m by issuing new shares, higher than its previous proposal. |
Debenhams is expected to go through a pre-pack administration, which would mean current shareholders would be wiped out. Among them is Mr Ashley, whose near 30% stake in the company cost about £150m to build up. | |
While the shops would continue trading for now, Debenhams has proposed closing around 50 branches from next year and renegotiating rents with landlords to tackle its funding problems. | While the shops would continue trading for now, Debenhams has proposed closing around 50 branches from next year and renegotiating rents with landlords to tackle its funding problems. |
Store closures | Store closures |
Debenhams has been struggling for a while and issued three profit warnings last year. It also has a debt pile of £640m. | |
Towards the end of 2018, the chain announced it was increasing its store closure plans from 10 to 50 over a three to five-year period. | Towards the end of 2018, the chain announced it was increasing its store closure plans from 10 to 50 over a three to five-year period. |
The company said it was not ready to release a list of which shops may be affected. | The company said it was not ready to release a list of which shops may be affected. |
In February, it was revealed that the shutting of 20 of those stores could be brought forward if the retailer took out a company voluntary arrangement (CVA), a form of insolvency that can enable firms to seek rent cuts and close unwanted stores. | |
Debenhams has 165 stores and employs around 25,000 people. | Debenhams has 165 stores and employs around 25,000 people. |