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Debenhams shareholders likely to be wiped out over £200m financing option

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Struggling department chain store Debenhams are to go ahead with a £200m refinancing option, which will possibly wipe out all existing shareholders, including Mike Ashley’s 30% stake.

On Thursday Debenhams announced they have received approval from most of their bondholders to make amendments to loan notes that are due in 2021.

Debenhams will now be able to embark restructuring the company, enabling the store chain to secure the company.

Sports Directs Mike Ashley has been battling to seize control over the company, it is likely that Ashley’s shares will now be wiped out.

It is likely that Debenhams will now seek a debt-for-equity swap and will start a pre-pack administration, the later does not require shareholders permission so is more likely to go ahead.

A company voluntary arrangement (CVA) will enable Debenhams to close stores and negotiate rent reductions. Both options will see shareholders and existing investors losing any holding in the company.

Debenhams has resisted Ashley’s offers and this move is likely to infuriate him as on Wednesday Ashley said Sports Direct are tabling an offer which would value the business at £61.4m.




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