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Raising funds to reduce debt
Source: Agencies |
June 5, 2009, Friday
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Print Edition
Print Edition
BRITISH department stores group Debenhams unveiled plans yesterday to raise 323 million pounds (US$536 million) in a share sale to cut its debts and said its profit was continuing to grow in a tough market.
The retailer, which runs more than 150 stores across the United Kingdom and Ireland, said it would raise the money via a placing and open offer of new shares.
It also said it had negotiated a relaxation of the terms of its main loan agreements and that pretax profit for the 12 weeks ended May 23 were ahead of the same time last year.
A source close to the matter told Reuters on Wednesday that the fundraising was likely to be priced below that day's closing of 92.25 pence, but above 75 pence.
Debenhams said the stakes of private equity firms TPG and CVC - which together own over 20 percent of the stock according to Reuters data - would fall below the level that would allow them to have board seats following the share sale, indicating they will not participate in the new share offering.
Debenhams has long been tipped to raise funds to trim its around 900 million pound debt pile.
The firm, Britain's second-biggest department stores group behind John Lewis, reiterated in April that "it is important that leverage is taken off the agenda."
Debenhams returned to the stock market in 2006 after over two lucrative years in private equity hands.
The stock was refloated at 195 pence, but plunged to as low as 20.5 pence last November on fears a steep consumer downturn would lead it to breach its debt agreements.
The company has always said that it would meet its debt dues and stronger first-half results led to a strong share price recovery.
The retailer, which runs more than 150 stores across the United Kingdom and Ireland, said it would raise the money via a placing and open offer of new shares.
It also said it had negotiated a relaxation of the terms of its main loan agreements and that pretax profit for the 12 weeks ended May 23 were ahead of the same time last year.
A source close to the matter told Reuters on Wednesday that the fundraising was likely to be priced below that day's closing of 92.25 pence, but above 75 pence.
Debenhams said the stakes of private equity firms TPG and CVC - which together own over 20 percent of the stock according to Reuters data - would fall below the level that would allow them to have board seats following the share sale, indicating they will not participate in the new share offering.
Debenhams has long been tipped to raise funds to trim its around 900 million pound debt pile.
The firm, Britain's second-biggest department stores group behind John Lewis, reiterated in April that "it is important that leverage is taken off the agenda."
Debenhams returned to the stock market in 2006 after over two lucrative years in private equity hands.
The stock was refloated at 195 pence, but plunged to as low as 20.5 pence last November on fears a steep consumer downturn would lead it to breach its debt agreements.
The company has always said that it would meet its debt dues and stronger first-half results led to a strong share price recovery.
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