Morning:
13°c
DEBT-laden Debenhams today moved to pay off about a third of its £950 million borrowing mountain, raising £323 million from the City.
The news came as latest figures revealed the group had had a tough May with a significant fall in like-for-like sales.
The fashion-led department stores chain said it is raising the money through a placing and open offer. The fund-raising will significantly dilute existing shareholders who choose not to invest.
They include private-equity houses Texas Pacific Group of the US and London's CVC Capital Partners, which have been criticised for so loading Debenhams with debt during their ownership before selling the company back to the stock market.
The fundraising by a company valued at £814 million before the open of trading today will see TPG and CVC's interests in Debenhams fall to 14% from 21%. Chief executive Rob Templeman said the private-equity firms back the move.
Debenhams' debts will fall to £650 million and Templeman said: “We have been saying for some months that we need to get debt off the agenda. This fundraising gives us the operational flexibility to make opportunistic acquisitions.”
Recent trading though has been poor. In the seven weeks to mid-April, the firm reported like-for-likes ahead by 1.9% as it claimed fashion shoppers were flocking to its designers. However, for the 12 weeks to late May there was a fall of 0.8%, indicating deep decreases in like-for-like sales in recent weeks.
Reader views (2)
I am very pleased Debenhams are doing badly - it is not just how they treat their staff but their customers - I was assaulted by their private security goons for refusing to move away from a cubicle where I was consulting with my daughter about prospective purchases - I am a grey haired pensioner! I had bruises up my arm for over a week - the CEO's response - his staff are fully trained and acted properly!!!! So please dont shop at Debenhams - let's hope they go under
- Wendy Davis, London UK
The way they treat staff I'm not surprised. Give Templeman & Co a bit of their own medicine.
- Robert Turner, Corsham UK
