Newcastle United owner, Mike Ashley, has just lost a huge amount of money.
It is thought Ashley had ploughed in at least £150m into Debenhams, taking a 30 per cent ownership, but it hasn’t saved the group which has fallen into administration, wiping out the shareholders in the business.
The company and its lenders rejected a last-ditch offer of a new £200m cash injection, as it was dependent on Ashley becoming chief executive.
Unfortunately this is likely to pave the way for job losses and store closures. Debenhams has been struggling for a while and issued three profit warnings last year. It also has a debt pile of £640m.
The company has now been taken over by its lenders, decimating the current shareholders. The lenders want to close up to 50 stores via an insolvency process known as a company voluntary arrangement.
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, whilst deleveraging the Group’s balance sheet.