Mike Ashley weighs in with desperate rescue offer for Debenhams

Mike Ashley weighs in with desperate rescue offer for Debenhams

Administrators have sold the group to a newly-incorporated company controlled by Debenhams' lenders, including hedge funds thought to include Alcentra, Angelo Gordon and Silver Point Capital.

The Financial Conduct Authority has "temporarily" suspended shares in Debenhams at the request of the company, with an announcement over the future of the chain expected this morning.

Debenhams' operating companies have been sold to the group's lenders in return for reducing its £620m debt pile and injecting almost £100m of new funds to keep the group afloat.

Professor John Colley, of Warwick Business School, said:"Clearly the bond holders and lenders would much prefer a receivership rather than Mike Ashley in control".

Ashley, who spent at least £150m on building up a near 30% stake in Debenhams, lost out after the company and its lenders rejected a last-ditch offer of a new £200m cash injection as it was dependent on him becoming chief executive.

Debenhams department store in Limerick will continue to trade as normal for now, despite its United Kingdom parent group going into administration this Tuesday.

Billionaire Mike Ashley's Sports Direct said it did not intend to make an offer to buy Debenhams after lenders took control of the ailing retailer on Tuesday.

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The company's chairman, Terry Duddy, said: "It is disappointing to reach a conclusion that will result in no value for our equity holders".

But he said it would allow Debenhams to continue trading as normal, access new funding and carry out its turnaround plans, while reducing debt.

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.

'We are in the process of writing to all members with further information and we will continue to keep them informed'.

The administration comes after a battle between Mr Ashley and the Debenhams board over the future of the 240-year-old company.

Landlords are likely to willing to talk to the new owners about the cost of leases - few department stores are looking for new premises now and the cost of converting their buildings to new uses is very high.

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