Debenhams inches closer to CVA

Debenhams Stevenage

Embattled department store Debenhams is reported to be moving closer to a company voluntary arrangement (CVA), as it holds talks with landlords and banks.

The Sunday Times reports that the retailer is instructing property agents to determine the rent that it should be paying on its stores, ahead of a rent deadline on 25 March. It is also thought to be holding talks with banks to increase borrowing.

The CVA proposal could see 20 stores closing this year, dependent on the rent reductions secured across the 166 store estate.

Debenhams announced in October that 50 stores were set to close, but a potential CVA deal would see the closures accelerate.

The Sunday Telegraph reported that Debenhams may be set to reveal it has bagged a lifeline loan from lenders, and is considering a debt for equity swap.

The retailer is said to have held talks with hedge fund investors including Angelo Gorgon, Alcentra and Silverpoint, with the aim of securing some breathing room from its heavy financial commitments.

Last week, Drapers revealed that Debenhams is making up to 60 roles redundant at its London head office and Taunton support centre as part of the retailer’s ongoing cost cutting scheme. 

In January, Sports Direct owner Ashley, who owns almost 30% of Debenhams, managed to win enough votes at the retailer’s annual general meeting to force chairman Sir Ian Cheshire to resign, and to remove chief executive Sergio Bucher from the board.

The department store also announced a £491.5m statutory pre-tax loss for the year to 1 September 2018, dropping from a £59m profit the previous year. EBITDA fell by 27.5% to £157.3m and underlying profit before tax more than halved, dropping 65.1% to £33.2m.

Like-for-like sales were down by 2.3%, and Debenhams described beauty and fashion as “weak” areas.