- Hope for 12000 Debenhams employees as Mike Ashley’s Frasers Group swoops in for last-minute rescue talks
- Debenhams was in the process of a liquidation process after JD Sports dropped out of sales talks last week
- Debenhams has been in administration since April, and it went up for sale as part of it
By guest author Elias Jahshan from Retail Gazette
Debenhams staff have been thrown a glimmer of hope after the department store chain entered 11th-hour talks with Mike Ashley’s Frasers Group about a possible rescue.
According to The Sunday Times, the retail tycoon revived his interest in taking over Debenhams over the weekend, after JD Sports withdraw from acquisition talks last week and placed the 242-year-old retailer on the verge of liquidation.
While Frasers Group finance director Chris Wootton said the current Debenhams rescue talks were on a knife edge, should it be successful it could save up to 12000 retail jobs.
JD Sports was understood to have been in pole position in a sale process initiated by Debenhams’ administrators following its insolvency announcement in April.
JD Sports’ withdrawal on Tuesday (Dec. 1) was partly linked to the administration of Sir Philip Green’s Arcadia Group, which is the biggest operator of concessions in Debenhams stores.
Frasers Group – which owns Sports Direct, Jack Wills, Evans Cycles and rival department store chain House of Fraser – is now looking to buy Debenhams in a deal worth around £200 million, The Sunday Times reported.
The last-minute rescue deal could also see Frasers Group operate Debenhams’ 124 stores under 12-month licences.
This is not the first time Ashley has expressed interest in acquiring Debenhams.
Frasers Group was among the several suitors during the bidding war for Debenhams before it dropped out of the race last month, paving way for JD Sports to enter exclusive talks with the beleaguered department store’s sales advisors.
Ashley also grabbed headlines in 2019 for his various takeover attempts of Debenhams in the run-up to its first administration.
At the time, Frasers Group was the largest shareholder of Debenhams, and its stake was wiped out when the department store fell into administration before immediately bought out by a consortium of lenders and banks known as Celine.
Wootton suggested that Frasers Group’s current rescue talks could be jeopardised because of Arcadia Group’s administration and because of the lack of reform around business rates.
“We [Frasers Group] hope to be able to save as many jobs as possible,” he told The Sunday Times.
“However, we have found that Debenhams has been overly reliant on Arcadia for many years, and with the administration of Arcadia last week, as well as no end in sight to the outdated business rates regime which unduly punishes the likes of Debenhams, it may be a bridge too far.”
When Debenhams fell into administration in April – it was the second such insolvency in 12 months and less than a year since it implemented a CVA process that saw it shut down several stores immediately after last Christmas and before the pandemic.
It blamed the latest administration on the Covid-19 crisis and subsequent three-month, UK-wide lockdown that saw the temporary closure of all its stores.
Since then, it has scrapped around 6500 jobs – of which 2500 were confirmed in August alone – shut down 18 stores, and advisors were drafted to explore a sale of the business.
When JD Sports dropped out of sales talks last week, Debenhams said its administrators “regretfully” decided to start winding down operations while continuing to seek offers “for all or parts of the business”.
Those options included a sale of all or part of the UK business, a further restructure of Debenhams’ operations to go forward on a standalone basis, or the orderly wind-down of the Debenhams business.
This does not impact Magasin du Nord in Denmark, which is owned by Debenhams and continues to operate independently.