Debenhams in ‘advanced’ talks on £150m refinancing amid Ashley battle

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Debenhams says it is in “advanced” talks with its banks over a £150m cash injection as it battles Mike Ashley for control.

The department store chain said it was seeking the sum, £40m of which would refinance a £40m bridging loan secured last month as part of its wider recovery plan.

Securing the money is a crucial step for Debenhams as the retail tycoon’s Sports Direct – its largest shareholder – looks to remove the bulk of the board and see its chief executive Sergio Bucher replaced by Mr Ashley himself.

The billionaire made his move on Thursday night by calling a shareholder vote.

Debenhams shares rose by up to 30% the following day.

Sky News reported then that while Debenhams was tight-lipped on its position, saying publicly only that it was “disappointed”, there was fury behind the scenes at the top of the business.

:: Bad-tempered battle for Debenhams turns nasty

Mr Ashley made his move just days after Debenhams had issued a fresh profit warning – blamed on higher turnaround costs.

The company had said then that it was in discussions with stakeholders that had progressed to “include options to restructure our balance sheet in order to address our future funding requirements”.

It also said that while like-for-like sales growth had remained elusive, the rate had eased following a post-Christmas improvement.

Market analysts have pointed to a string of problems for Debenhams – in addition to the tough consumer environment and higher costs for the high street.

These include its stock and sourcing – an issue it is addressing through a new partnership – and a long-term failure to get to grips with online competition.

The turnaround plan at Debenhams includes the closure of 50 stores.

Its shares – hit hard over the past year to take its market value below £40m – rose 10% when the market opened on Monday but those gains later petered out and they eventually closed 1% lower.

Mr Ashley is yet to reveal what his plans for Debenhams would be should he win the day and become chief executive – leaving Sports Direct behind.

(c) Sky News 2019: Debenhams in ‘advanced’ talks on £150m refinancing amid Ashley battle

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