Struggling Debenhams secures £40m lifeline
Embattled Debenhams has secured backing of £40m giving it more time to arrange a longer-term refinancing and store closure plan.
The struggling chain, which has branches in Manchester, Liverpool and Stockport, has been trying to reach a deal with its banks.
Debenhams chief executive Sergio Bucher described the new 12-month credit facility as a “first step in our refinancing process”.
He added: “The support of our lenders for our turnaround plan is important to underpin a comprehensive solution that will take account of the interests of all stakeholders, and deliver a sustainable and profitable future for Debenhams.”
The rescue process is expected to involve the closure of struggling stores and lenders taking a stake in the company.
Debenhams has 165 stores and employs about 25,000 staff.
The retailer reported a record pre-tax loss of £491.5m last year and said sales fell sharply over Christmas.
Last year, rival chain House of Fraser went into administration before Mike Ashley, the Sports Direct founder, bought the department store for £90m.
Since then a deal has been struck to save the House of Fraser store on Deansgate in Manchester.
Debenhams also announced a new sourcing partnership with Li & Fung, a Hong Kong-based supply chain manager.
The retailer has been talking to property advisory firms about organising the closure of as many as 50 stores under a company voluntary arrangement (CVA).
Other struggling high street chains including New Look, Mothercare and Carpetright have been forced to close stores in the face of high rates and changes in consumer spending.
The shift to online spending has badly damaged many of the established high street brands including House of Fraser.