Debenhams warns restructuring options could wipe out shareholders

( via — Fri, 22nd March 2019) London, UK —

LONDON (Reuters) – Struggling British department store group Debenhams warned on Friday that its shareholders could be wiped out as a result of some of the restructuring options it is considering.

The firm said it was seeking 200 million pounds ($262 million) of additional funds from lenders that would give it the ability to pursue restructuring options to secure its future.

But it warned “certain of these options – if they materialize – would result in no equity value for the company’s current shareholders.”

Debenhams shares were down 59 percent at 1.35 pence at 0926 GMT.

Debenhams said it was seeking agreement from bondholders to change the terms of some of their bonds as part of the process to secure the new loans of up to 200 million pounds from existing lenders.

It had previously said it was working on a plan to raise an additional 150 million pounds.

Debenhams has launched a “consent solicitation” for holders of its 5.25 percent senior notes due 2021. This process seeks consents from bondholders to certain amendments to the existing notes.

Debenhams said a successful consent solicitation would allow it to enter into the new loan facilities.

The firm is also trying to fend off an attempt by its largest shareholder, Mike Ashley’s Sports Direct, to take control of the business.

Reporting by James Davey, Editing by Paul Sandle