DEBENHAMS has secured a lifeline from its lenders as the department store chain seeks a broader refinancing deal amid long-term pressures on the high street.
The retailer has confirmed an agreement with current lenders and noteholders to extend its borrowing facilities by a year with a cash injection of £40 million.
It will act as a bridge while the company continues talks for a longer-term refinancing.
Chief executive Sergio Bucher 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."
Shares in the company rose as much as 48.5 per cent to 4.658p in early trading, and closed up 28.2%, or 0.89p, at 4.02p.
The announcement ends months of uncertainty over the company's finances, which led to Sports Direct boss and Debenhams shareholder Mike Ashley saying the firm had little chance of survival.
Mr Ashley's offer of a £40m loan was turned down on the basis that his terms would affect other shareholders.
Separately, Debenhams announced yesterday that it has reached an agreement with supply chain manager Li & Fung to oversee some of the chain's sourcing. The Hong Kong-listed firm was described by Mr Bucher as being a "key part" of the Debenhams 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," he said.
Debenhams is also working with advisers at KPMG on restructuring options thought to include a company voluntary arrangement (CVA), though plans have been kept tightly under wraps.
Neil Wilson, chief market analyst at Markets.com, said the refinancing would help management to navigate tough times ahead.
"Disposals, especially Magasin in Denmark, are certainly on the cards, as well as store closures in the UK," he said.
"It would appear this extra facility will cover the rent payment due (at) the end of March, but we also need to see progress on a proposed CVA to deliver an accelerated store closure programme."
Why are you making commenting on The Herald only available to subscribers?
It should have been a safe space for informed debate, somewhere for readers to discuss issues around the biggest stories of the day, but all too often the below the line comments on most websites have become bogged down by off-topic discussions and abuse.
heraldscotland.com is tackling this problem by allowing only subscribers to comment.
We are doing this to improve the experience for our loyal readers and we believe it will reduce the ability of trolls and troublemakers, who occasionally find their way onto our site, to abuse our journalists and readers. We also hope it will help the comments section fulfil its promise as a part of Scotland's conversation with itself.
We are lucky at The Herald. We are read by an informed, educated readership who can add their knowledge and insights to our stories.
That is invaluable.
We are making the subscriber-only change to support our valued readers, who tell us they don't want the site cluttered up with irrelevant comments, untruths and abuse.
In the past, the journalist’s job was to collect and distribute information to the audience. Technology means that readers can shape a discussion. We look forward to hearing from you on heraldscotland.com
Comments & Moderation
Readers’ comments: You are personally liable for the content of any comments you upload to this website, so please act responsibly. We do not pre-moderate or monitor readers’ comments appearing on our websites, but we do post-moderate in response to complaints we receive or otherwise when a potential problem comes to our attention. You can make a complaint by using the ‘report this post’ link . We may then apply our discretion under the user terms to amend or delete comments.
Post moderation is undertaken full-time 9am-6pm on weekdays, and on a part-time basis outwith those hours.
Read the rules here