Debenhams CVA gets majority approval, targets big rent cuts
today May 9, 2019
Debenhams' creditors have voted in favour of its CVA that will mean the closure of at least 22 of its shops and rent cuts for many others. The company said that the support for the CVA plan was “significantly above” the 75% it needed to get though.
The company, which is the UK's largest department store operation with 166 shops at present and around 25,000 staff, will close 22 sites in an initial wave after Christmas. But it’s expected to shut 50 in total over the longer term.
Of the shops remaining open, just 39 will continue to pay rent at the current rates for the remainder of their leases, with the company targeting rental reductions of between 25% and 50% for the others.
Earlier on Thursday, Debenhams’ new owners, which include lenders Barclays, Bank of Ireland, Silver Point Capital and GoldenTree Asset Management, issued a statement saying that the chain will be staying under the control of the consortium after a sale process ended with no acceptable bids being placed.
The creditor group had taken control of the company after its pre-pack administration last month and had been prepared to sell the department store business on to any interested buyers at the right price. But administrators at FTI Consulting said they considered the buyout bids that had come in to be "not at the level required to be taken forward”.
The owner consortium, confusingly called Celine, gave assurances that it’s a "committed long-term owner" and said Debenhams has plenty of fresh funding with which to proceed with its turnaround.
It also said that the consortium has extensive turnaround experience in its ranks, “which we will deploy to support the management's plan and to position Debenhams for a long-term successful future.”
After the CVA vote, Debenhams' executive chairman Terry Duddy said: "I am grateful to our suppliers, our pension stakeholders and our landlords who have overwhelmingly backed our store restructuring plans. We will continue to work to preserve as many stores and jobs as possible through this process. This is a further important step to give us the platform to deliver a turnaround.”
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