King's Lynn store trading as normal, as Debenhams goes into administration

High street retailer Debenhams has today called in administrators - but says stores, including its branch in Lynn, will continue to trade as usual.

The move follows a prolonged bid by Sports Direct to take control of the company.

It had two offers rejected over the last 24 hours to pump up to £200million into the ailing firm.

But the directors have now opted to take the firm into administration. Shares in the firm were suspended this morning.

The pre-pack administration process means the group will be taken over by Debenhams' lenders.

As a consequence, it will have access to £200m in additional funding.

It says it will now continue with the "restructuring of its operations" which will include "optimising its store portfolio". That is likely to mean the implementation of around 50 store closures.

Terry Duddy, Debenhams’ 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, while 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 Debenhams will now be able to move forward on a stable footing.”

The move will mean existing shareholder will receive nothing for their holdings. Most prominent is Sports Direct boss Mike Ashley.

He held a 29 per cent stake in the company which he had invested some £150m in building up.

He had wanted to invest in the company on the proviso he would become CEO – a move rejected by the retailers’ board.

Chad Griffin, Simon Kirkhope and Andrew Johnson of FTI Consulting LLP were appointed as joint administrators and the company’s shares are now held by Celine UK Newco – an entity owned by a number of the company’s secured lenders.