THERE are major fears for the future of Debenhams in Worcester after the firm went into administration this morning.
The announcement was made after the owners of the department store rejected a new offer from Sports Direct in the early hours, according to national media reports.
The firm's shares were suspended before this morning's trading - at its own request - and it is now gone into pre-pack administration, where shops continue trading but the business would come under the control of its lenders. Reportedly the lenders are made up of High Street banks and US hedge funds.
The dramatic developments happened after the firm rejected a £150m offer from Mike Ashley's company yesterday and a second offer, considered overnight, was turned down reportedly because Mr Ashley wanted to be chief executive.
Debenhams swung to a £491.5 million loss in the year to September 1, the biggest in its history. The loss compares with a £59 million profit in 2017.
Debenhams said in an initial statement: “The board confirms that it received a revised, highly-conditional, proposal from Sports Direct in the early hours of 9 April, which indicated a willingness of Sports Direct to underwrite an equity issue of £200 million.
“The company’s lenders have confirmed to the company that the proposal, on the terms set out, was not sufficient to justify an extension to the 8 April deadline."
After the administration announcement Tony Duddy, Debenham's chairman, said: "It is disappointing to reach a conclusion that will result in no value for our equity holders.
"However this transaction will allow Debenhams to continue trading as normal; access the funding we need; and proceed with executing our turnaround plans, whilst deleveraging the group's balance sheet.
"We remain focused on protecting as many stores and jobs as possible, consistent with establishing a sustainable store portfolio in line with our previous guidance.
"In the meantime, our customers, colleagues, pension holders, suppliers and landlords can be reassured that Debenhams will now be able to move forward on a stable footing.
"I would like to thank them all for their recent and continuing support."
The firm has a store in Crowngate Shopping Centre, one of 166 stores that will initially continue to trade, although 50 branches had already been earmarked for closure.
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