Debenhams has received a £40m cash injection from lenders in order to buy it more time as it looks to secure a longer term investment deal.
The new investment allows the retailer to extend its current £520m borrowing facilities with banks for another 12 months, meaning it will be able to continue talks with lenders. In the last year, the retailer has issued three profit warnings as it looks to renegotiate its debts and accelerate plans to close stores, with 20 outlets due to shutter this year.
News of new funding caused a 40% surge in Debenhams’ share price when trading opened this morning. Just last year Debenhams announced restructuring plans which will see the loss of 50 stores and put 4,000 jobs at risk.
Sergio Bucher, CEO, said: “Today’s announcement represents the first step in our refinancing process. The support of our lenders for our turnaround plan is important to underpin a comprehensive solution that will take account of the interests of all stakeholders, and deliver a sustainable and profitable future for Debenhams.
“In addition, the partnership agreement we are announcing today with Li & Fung will be a key part of our turnaround plan. It gives us access to state-of-the-art technology in the LF Digital platform, providing end-to-end visibility across our supply chain. This will help us anticipate and respond more quickly to trends and our customers’ preferences, as well as delivering better quality product.”