Debenhams has gone into administration - what is the future for stores in Ipswich, Bury and Colchester?
PUBLISHED: 12:06 09 April 2019 | UPDATED: 16:13 09 April 2019
Debenhams has entered administration in a move expected to create a wave of store closures and job losses - leaving employees and shoppers across the region feeling worried about the future.
The struggling retailer suspended its shares earlier today (Tuesday, April 9) after turning down another takeover bid from Sports Direct billionaire Mike Ashley.
With the last grasp takeover ditched the firm – with large stores in Ipswich, Bury St Edmunds and Colchester – has now gone into administration.
This pre-pack administration will see Debenhams’ lenders seize control of the company. The management had already announced that about 50 of the company’s 165 stores across the country were likely to close – although none have been identified yet.
The Ipswich Debenhams is the largest store in the town centre, and many see it as vital for the regeneration of the area – and the company signed a 125-year-lease on the building only six years ago.
And it is understood to be one of the more profitable stores in the company’s portfolio – but the new owners are likely to be seeking to renegotiate the lease if it is to have a guaranteed long-term future in the town.
The Bury Store is a centrepiece of The Arc and opened 10 years ago – and there is also a large store in Colchester although that is in competition with Fenwick’s department store in the town.
Landlords are likely to willing to talk to the new owners about the cost of leases – few department stores are looking for new premises now and the cost of converting their buildings to new uses is very high.
Ipswich’s former BHS store has been vacant for nearly three years, and while there have been proposals to convert it into new uses but nothing has happened there yet.
Mr Ashley, who held a 30% stake in Debenhams, has had his share wiped out through the process – along with other similar shareholders.
The move will see the retailer’s debt reduced and comes ahead of a wider restructuring which will see around 50 stores close via a Company Voluntary Arrangement.
It will also see a £200 million refinancing plan, announced in March, go ahead.
Mr Ashley’s attempts to take control of Debenhams had become increasingly desperate, and over the weekend the businessman demanded the board be investigated, two members to undergo lie detector tests and trading in its shares to be suspended.
A spokesman for Suffolk Trading Standards said: “With news that Debenhams are on the brink of administration, we would advise that if you gave any gift vouchers, and are able to get to a store, you should spend them as soon as possible.”
Sports Direct billionaire Mike Ashley made yet another bid to rescue offer to save the firm from administration, only to see it rejected and shares suspended an hour later.
The offer involved underwriting a rights issue which would see existing investors buying newly issued shares and is an advance on an £150 million plan tabled on Monday, which was rejected.
Under Mr Ashley’s latest proposal, Debenhams’ lenders would have to agree to write off £82 million of its £720 million debt mountain, as well as install the tycoon as chief executive.
Lenders to Debenhams said the final proposal, on the terms set out, was “not sufficient”.