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Monday, 15 July

Debenhams 50 Store Closures - First 22 Revealed

Debenhams Stevenage

Debenhams Group Holdings has announced details of two proposed Company Voluntary Arrangements that will see 22 stores close by 2020.

The first Company Voluntary Arrangements (CVA) pertains to Debenhams Retail Limited, the main trading entity. The other relates to Debenhams Properties Limited. Although Debenhams Plc went into administration, the two trading companies stay intact - with all their supply agreements in place.

Terry Duddy, Executive Chairman of Debenhams, said: "The issues facing the UK high street are very well known. in order for the business to prosper, we need to restructure the group's store portfolio and its balance sheet, which are not appropriate for today's much changed retail environment. Our priority is to save as many stores and as many jobs as we can, while making the business fit for the future."

 

Landlords

The CVAs do not seek to compromise claims of any creditors other than certain landlords, local authorities and inter-company liabilities. All trade suppliers and the entitlements of employees will continue to be paid in full during the process.

 

 

£100 million of debt

The CVA is part of the company's restructuring and turnaround plan. In conjunction with this, certain of the Group's financial creditors recently provided £200 million of fresh liquidity and have committed to equitise £100 million of debt. Value recovery for the shareholders of Debenhams plc is expected to be nil.

 

50 to go

The CVA proposals provide a mechanism to restructure the store estate in line with a plan outlined in October 2018 to reduce the current 166 UK store portfolio by closing around 50 stores. The first stage of that programme proposes up to 22 store closures in 2020.

 

Summary:

  • All Debenhams stores are proposed to remain open during 2019, including through Christmas peak trading.

  • Up to 22 stores expected to close in 2020.

  • Further store closures to be confirmed - the final number being dependent on future trading performance; discussions with landlords regarding changes in lease terms and rental levels; and with local authorities regarding business rates.

  • Debenhams has already confirmed the closure of its Lodge Farm warehouse. Its three continuing warehouse facilities could be consolidated further as a result of this process.

  • c1200 people work in the stores affected and they have been informed.

  • The 11 stores in the Republic of Ireland are not affected by the CVA proposal.

 

Creditors

Assuming the CVA becomes effective, a fund of a maximum value of £25 million will be available for those creditors compromised by the CVA. To become effective, each CVA Proposal requires 75% or more in value of the creditors voting at the Creditors' Meeting on the resolutions to approve the CVA and for more than 50% of the total value of the unconnected creditors to vote in favour. The meeting will be held on 9 May 2019.

 

Administration

Administrators were appointed to Debenhams plc (in administration) on 9 April 2019. The underlying group operating companies are unaffected and all businesses are continuing to trade as normal. Debenhams Group Holdings Limited, its subsidiaries and certain dormant companies, which together make up the Debenhams Group, were transferred to the ownership of Celine UK NewCo 1 Ltd. on 9 April 2019.

 

Stores expected to close in 2020

 

Altrincham, Ashford, Birmingham Fort, Canterbury, Chatham, Eastbourne, Folkestone, Great Yarmouth, Guildford, Kirkcaldy, Orpington, Slough, Southport, Southsea, Staines, Stockton, Walton, Wandsworth, Welwyn Garden City, Wimbledon, Witney, Wolverhampton.

Picture: Debenhams Stevenage Opened in August 2017.

Article written by Brian Shillibeer

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