Debenhams has announced it’s completed a £200 million refinancing.
The retailer will now fall into the hands of lenders unless Sports Direct makes a firm offer for Debenhams shares, or underwrites a rights issue, or provides debt funding for the company.
Laith Khalaf, Senior Analyst, Hargreaves Lansdown comments: “Mike Ashley’s now between a rock and a hard place. He faces either seeing his stake in Debenhams disappear, or having to stump up cash to keep shares in the company alive.
“If Sports Direct doesn’t want to pour good money after bad, the equity in Debenhams will almost certainly be wiped out, and the lenders will take control of the company.
“Debenhams will also seek to restructure its store estate to reduce its rent burden. That suggests either store closures, or a renegotiation of rental terms, or both.
“This has been a really desperate period for Debenhams, and it now looks like the company is on the brink of seeing its shares extinguished, unless there’s one last twist in the tale, courtesy of Mike Ashley.”