Debenhams denies lenders’ threat to hold up restructuring over rent cuts

Department store chain Debenhams has denied reports of it telling landlords that its lenders may not sign off a “critical debt restructuring” unless they agree to further rent cuts.

Debenhams and its lenders agreed to swap £100m of debt for equity in April last year after it entered pre-pack administration, following the rejection of Sports Direct’s offer to underwrite £150m equity issuance.

The chain could be forced to close further stores if it is unable to lower rent.

A Debenhams spokesperson told Retail Sector: “The commitment of Debenhams’ lenders to a debt for equity swap is not in question. The business is now in a position to proceed with the final phase of its balance sheet restructuring, to include the write-down of at least £100m of debt, as was announced in April 2019.

”The precise timing and location of any further store closures will depend on our continuing negotiations with landlords and councils to determine whether rent and rates bills can adjust to more realistic levels reflecting today’s retail market conditions.”

In January 2020, Debenhams announced plans to close 19 of its UK stores, resulting in 660 job losses.