TIDMDEB
RNS Number : 4876U
Debenhams plc
29 March 2019
29 March 2019
NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, IN WHOLE OR IN
PART, DIRECTLY OR INDIRECTLY, IN, INTO OR FROM ANY JURISDICTION
WHERE TO DO SO WOULD CONSTITUTE A VIOLATION OF THE RELEVANT LAWS OR
REGULATIONS OF SUCH JURISDICTION. THIS ANNOUNCEMENT CONTAINS PRICE
SENSITIVE INFORMATION,
FOR IMMEDIATE RELEASE
Debenhams plc
GBP200m refinancing completed
Debenhams plc (the "company") today confirmed that it has put in
place new facilities with its existing lenders. These provide the
group with facilities totalling GBP200m of new money, including
GBP40m to replace the interim borrowing announced on 12
February.
Terry Duddy, Chairman of Debenhams, said:
"We are pleased to have agreed this comprehensive funding
package which secures the future of the Debenhams business and
provides reassurance for Debenhams' employees, pension holders,
suppliers, lenders and other stakeholders. We have also preserved a
route for our shareholders to participate in the future of the
business, but this requires the support of our major
shareholder.
"We will now move to the next phase of the restructuring of the
business, which includes reducing rents and reshaping our store
portfolio, as we have referenced in previous announcements. These
actions are necessary to ensure the strongest possible platform to
support the business going forward."
The facilities are for GBP101 million and GBP99 million and the
company has served a draw down notice for all of the first facility
today. Availability of the second facility is subject to the
satisfaction of one of a number of milestones being reached by 8
April 2019. These milestones include Sports Direct International
plc ("Sports Direct") or another shareholder holding 25% or more of
the company shares, entering into an agreement with the company and
its lenders covering either (i) a firm and binding offer for the
company which includes satisfactory arrangements to refinance the
group debt that becomes due and payable on a change of control, and
provides the group with sufficient working capital; or (ii)
cancellation of the request to convene an EGM of the company, a
stabilisation agreement with the company and a commitment by Sports
Direct to either underwrite a rights issue by the company or
provide funding by way of a subordinated debt instrument on terms
agreed with the group's lenders and noteholders.
If these milestones are not satisfied, the second facility would
be available to the group's subsidiaries only upon transfer of
those subsidiaries into the ownership of a lender-approved entity.
This outcome would ensure the stability and continuing trading of
the group's operating subsidiaries, with no disruption to the
group's business, customers, employees, pension holders, suppliers
or operations. However, it would very likely result in no equity
value for the company's current shareholders.
As announced on 28 March 2019, the holders of the Company's
5.25% Senior Notes due 2021 (the "Notes") have provided consent to
the amendments sought to the terms of the Notes to enable the
facility to be entered into and drawn down. Following discussions
between the company, the trustees of the Debenhams pension schemes
and key pensions stakeholders, agreement has been reached with the
trustees to provide enhanced support to the pensions schemes,
including increased contributions and enhanced security.
The group has undertaken a thorough review of its store estate
in the context of the current and future retail environment and
plans to proceed with a restructuring of the estate that, if
approved, will result in a significant overall reduction in the
group's rent burden. This is a critical component of the group's
restructuring plan, and executing this is in part linked to the
provision of the facilities.
The board of Debenhams has also sought to do its utmost to
preserve value and optionality for the company's shareholders. The
board has received a number of proposals in recent weeks from
Sports Direct that have purported to provide a solution to the
group's financial challenges. In the board's judgement, none of
these have provided or been compatible with a comprehensive
solution.
The possible offer announced by Sports Direct on 25 March 2019
did not provide a solution to the group's immediate working capital
needs, and the board could find no way for the group to continue to
trade until such time as the offer, if made and successful, had
closed. The company therefore had no implementable alternative to
its well-developed plans to enter into the facilities in order to
protect the interests of its broader group of stakeholders
including employees, pension holders, suppliers and lenders. By
entering into the facilities there is provision for Sports Direct
to participate in a comprehensive solution, and we will be
contacting Sports Direct to outline once again the terms on which
their constructive participation would be possible if they wish to
participate.
-S-
Enquiries:
Analysts and investors
Debenhams PLC Katharine Wynne, Director of Investor Relations
020 3549 6304
Lazard (financial advisor) Marcus Taylor
020 7187 2319
Media
Brunswick Group Tim Danaher/Craig Breheny/Fiona Micallef-Eynaud
020 7404 5959
debenhams@brunswickgroup.com
A copy of this announcement will be made available on
Debenhams's website at
https://ir.debenhams.com/investor-overview.
Lazard & Co., Limited ("Lazard") is authorised and regulated
by the FCA in the United Kingdom. Lazard is acting as financial
adviser to Debenhams plc and for no one else in connection with the
matters set out in this announcement and will not be responsible to
anyone other than Debenhams plc for providing the protections
afforded to clients of Lazard, nor for providing advice in relation
to the matters referred to in this announcement.
Neither Lazard nor any of its affiliates owes or accepts any
duty, liability or responsibility whatsoever (whether direct or
indirect, whether in contract, in tort, under statute or otherwise)
to any person who is not a client of Lazard in connection with this
matters set out in this announcement, any statement contained
herein or otherwise.
APPIX
Details of the new money facilities
1. The new facilities entered into today comprise the following:
-- Facility A for a total aggregate amount of GBP101,250,000
which has been fully drawn and is available for utilisation subject
to certain conditions in order to provide liquidity for general
working capital purposes, repay the GBP40 million bridge facility
entered into on 11 February 2019 and for payment of fees in
connection with the facilities.
-- Facility B (for GBP98,750,000) which is tranched and subject
to conditions which provides phased access to the facilities based
on achieving certain milestones which include:
-- A firm intention to make an offer for the issued share
capital of the company by Sports Direct which is not withdrawn or
lapsed with evidence to the satisfaction of the lenders as to the
ability of Sports Direct to fully fund the repayment of the group's
existing financial debt, which would fall due and payable as a
result of a change of control, and evidence that the group's
working capital requirements through the offer period can be met;
or
-- No request to convene an EGM of the company being outstanding
without the approval of the majority lenders, any shareholder
owning more than 25% of the company having entered into a
stabilisation agreement in form and substance satisfactory to the
majority lenders and any shareholder owning more than 25% of the
company agreeing to underwrite a rights issue for shares in
Debenhams plc in an amount of no less than GBP200m, or having
provided no less than GBP200m in the form of a long term
subordinated debt instrument with no cashpay interest; or
-- The operating group being owned by a new entity reasonably
acceptable to the lenders under the new facilities.
-- Further tranches of the facility are available dependent upon
the timing and implementation of the group's operational
restructuring strategy with respect to its store estate as referred
to in its previous announcement of 5 March 2019.
2. The pricing of the facilities is in line with market pricing
for facilities of this nature and by reference to the prevailing
market conditions affecting the group. The pricing comprises a
backstop and upfront premium totalling 5.6% on the total amount of
the facilities, pro rata to each backstop provider and lender, as
relevant, an exit fee of 5% of the total amount of the facilities,
pro rata to each lender payable on the repayment or prepayment of
the facilities, margin of 12% per annum.
3. In the event that the conditions pertaining to the
availability of the first tranche of Facility B are not satisfied
by 8 April 2019 the company is likely to utilise restructuring
options which would result in the core operating subsidiaries of
the company (and in particular Debenhams Retail Limited and
Debenhams Properties Limited) being transferred into the ownership
of a lender--approved entity. The company confirms that in these
circumstances Debenhams Retail Limited and Debenhams Properties
Limited, together with the other operating subsidiaries of the
group, would continue to have access to the facilities with no
disruption to Debenhams' business, customers, suppliers or
operations.
4. It is a condition of the entering into of the facilities that
its existing RCF and note indebtedness are secured. In this
respect, the company has entered into an agreement with the
trustees of the group's pension schemes pursuant to which the
company and the trustees have agreed, among other things, that a
proportion of the group's pension liabilities will be secured and a
revised schedule of pension contributions will be entered into.
5. The current RCF lenders have extended their facilities to a
date currently no earlier than 30 June 2021; amended existing terms
to facilitate the new money facility being put in place; and
entered into a new financial covenant package consistent with a
facility of this type. Lenders have received a consent fee of 1.21%
in consideration of the above.
6. As part of the next phase of the restructuring, the group
will be seeking to reduce its operational and financial leverage to
address the group's balance sheet. Any such transaction would
require a further consent solicitation and or scheme of arrangement
with Noteholders and RCF lenders.
This information is provided by RNS, the news service of the
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contact rns@lseg.com or visit www.rns.com.
END
MSCUKURRKRAOUAR
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March 29, 2019 06:29 ET (10:29 GMT)
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