LONDON: Debenhams, the embattled U.K. department store chain that was taken over by its lenders earlier this month, plans to close as many as 22 stores next year and reduce rents on others in a bid to stay afloat.
The 241-year-old retailer is seeking to shut the outlets as part of a previously announced plan for about 50 closures, Debenhams said in a statement Friday. The overhaul will affect about 1,200 jobs, the company said.
Debenhams is also in negotiations with landlords to reduce rents and with local authorities to cut property taxes, according to the statement. To facilitate the closures, the retailer is proposing two different company voluntary arrangements -- U.K. court processes that allow insolvent firms to reach agreements with creditors.
Debenhams is struggling under more than 700 million pounds ($903 million) of debt and expensive leases agreed to years ago across its 166 stores in the U.K.
A debt restructuring, in which lenders including U.S. hedge funds Alcentra, GoldenTree Asset Management and Silver Point Capital took over, culminated in shareholders being wiped out. One of them -- billionaire Mike Ashley, chief executive officer of Sports Direct International Plc -- called the move a “national scandal.”
Debenhams’ store portfolio and balance sheet “are not appropriate for today’s much changed retail environment,” Executive Chairman Terry Duddy said in the statement.
KPMG is expected to oversee the CVA process, according to the statement. Debenhams creditors will vote on the proposals May 9. The company needs at least 75 percent support for them to go through. - Bloomberg