HUNDREDS of Scottish retail workers have been left fearing for the future of their jobs after department store chain Debenhams collapsed yesterday.
Administrators at FTI Consulting were appointed to the retailer at just before 10am and immediately sold the group’s operating companies to a new entity owned by its lenders, to whom Debenhams had been hundreds of millions of pounds in debt.
The new owners insisted stores will continue to trade as normal for now but closures and job losses are expected as part of a wider restructuring that will see around 50 shops shut via a company voluntary arrangement. A £200 million refinancing plan, announced last month, will also go ahead.
Debenhams has more than 15 stores in Scotland, including flagship branches in Glasgow and Edinburgh.
Sports Direct owner Mike Ashley, a 30% shareholder who had been attempting to take control of Debenhams, described the administration as a “national scandal” and called for the process to be reversed.
The change of ownership means the investments of former shareholders such as Ashley will be wiped out. He had spent at least £150m building up his Debenhams stake.
Ashley said in a statement that the administration should be reversed and Sports Direct given access to information to “save the business for all stakeholders”. He also slammed the authorities and the retailer’s advisers.
The statement said: “These politicians and regulators have proven to be as effective as a chocolate teapot. I restate my call for the advisers to go to prison given their skulduggery in undermining shareholders and other stakeholders, such as employees and pensioners.”
Debenhams chairman Terry Duddy said: “It is disappointing to reach a conclusion that will result in no value for our equity holders.
“However, this transaction will allow Debenhams to continue trading as normal; access the funding we need; and proceed with executing our turnaround plans. We remain focused on protecting as many stores and jobs as possible, consistent with establishing a sustainable store portfolio in line with our previous guidance.”
Sports Direct confirmed yesterday afternoon that it was no longer looking at making a formal takeover offer for Debenhams. However, advisers at Lazard have been instructed to oversee a sale process for the retailer which will launch immediately, leaving the window open for Ashley or another buyer to gain control of the chain.
Any bid would need to include the full repayment of the group’s debt.
Laith Khalaf, equity analyst at Hargreaves Lansdown, said it was a “hefty price tag to stump up for a company that’s struggling to make ends meet”. He added: “In theory it’s conceivable there could be some residual value for shareholders as part of this process, but it’s extremely unlikely.”
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