Debenhams secures 40 million pound cash injection

Struggling department store chain Debenhams has secured a 40 million pound cash injection following talks with its lenders to keep the retailer “on a stable footing for a sustainable and profitable future”.

In a statement, Debenhams confirmed that they had agreed an additional 12-month senior secured credit facility, which contains provisions for a step-up in pricing during the second quarter, in a move that it stated would act as a “bridge to facilitate a broader refinancing and recapitalisation.”

The move buys the embattled department store chain extra time to secure longer-term refinancing, and means they will not breach terms on its debt due by the end of this month. The retailer also added that it is planning to conclude a comprehensive refinancing by the end of the period.

Sergio Bucher, Debenhams chief executive, said in a statement: "Today's announcement represents the first step in our refinancing process. The support of our lenders for our turnaround plan is important to underpin a comprehensive solution that will take account of the interests of all stakeholders, and deliver a sustainable and profitable future for Debenhams.”

Debenhams enters into a partnership with Li and Fung

Debenhams also announced that it had entered into an agreement in principle with Li and Fung, the world's leading supply chain solutions partner, to develop a strategic sourcing partnership as part of its turnaround plan.

This partnership, the retailer added is expected to cover own-brand sourcing as it looks to improve product quality and lead-times, as well as higher achieved margins and better working capital efficiency. Initial orders under the agreement are expected to commence shortly.

Commenting on the deal, Bucher, added: “The partnership agreement we are announcing today with Li and Fung will be a key part of our turnaround plan. It gives us access to state-of-the-art technology in the LF Digital platform, providing end-to-end visibility across our supply chain. This will help us anticipate and respond more quickly to trends and our customers' preferences, as well as delivering better quality product.”

Earlier this month landlords were bracing themselves for a possible company voluntary agreement (CVA) from Debenhams, after reports suggested that the retail was negotiating with its banks to increase its borrowings before quarterly rent payment date of March 25.

This follows a poor performance over the Christmas period where Group gross transaction value for the 6 weeks to January 5, 2019, declining 3.8 percent, with group like-for-like sales dropping by 3.4 percent.

Image: courtesy of Debenhams

 

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