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Gloucestershire Business News

Debenhams goes into administration

Debenhams has gone in to administration, although all of its stores will continue trading, for now.

The beleaguered department store turned down an offer from Sports Direct to pump in £200million overnight and then asked for trading in shares to be halted before the markets opened on Tuesday.

And they have now appointed FTI Consulting as administrator for what is known as a pre-pack administration where creditors effectively take control while the company continues trading.

Shares were suspended at the company's request this morning and the move to enter administration means all shareholders have lost their stake.

That means Mike Ashley and Sports Direct's 30 per cent stake in the company that cost him a reported £150million to build has been wiped out in an instant.

Debenhams have been in trouble for some time, with successive trading updates warning of the perilous position of the company.

The High Street giant has already committed to closing up to 50 of its stores over a three to five-year period.

While trading will continue for now as normal, the company would try to renegotiate its rent at its sites in order to tackle a crippling debt.

Debenhams have 166 stores, including their King's Square outlet in the centre of Gloucester, and employ up to 25,000 people across the country.

In a statement released to the London Stock Exchange, Debenhams chairman Terry Duddy said: "It is disappointing to reach a conclusion that will result in no value for our equity holders.

"However, this Transaction will allow Debenhams to continue trading as normal; access the funding we need; and proceed with executing our turnaround plans, whilst deleveraging the Group's balance sheet.

"We remain focused on protecting as many stores and jobs as possible, consistent with establishing a sustainable store portfolio in line with our previous guidance.

"In the meantime, our customers, colleagues, pension holders, suppliers and landlords can be reassured that Debenhams will now be able to move forward on a stable footing."

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