LONDON (Within The Law) - Three of the city’s biggest names are working with Debenhams to try salvage something of the retail giant, but rescue talks hang by a knife-edge. One of the most recognised names on the high street seems all but doomed.
Freshfields Bruckhaus Deringer and Kirkland & Ellis have been providing advice to Debenhams. JD Sports’ decision to step away from the bidding process, seemed to leave the retail giant staring down the barrel. However, with Mike Ashley’s Fraser’s group returning for last minute to talks, hopes have been rekindled.
Ken Baird, the lead partner from Freshfields has plenty of experience with these kinds of cases. He is advising Debenhams has helped see the firm through a lengthy restructuring process. He also helped House of Fraser during its woes in 2018.
Last week JD Sports withdrew from discussions to buy the retailer leaving it on the brink of liquidation. However, Frasers Group, which owns Sports Direct and House of Fraser among others, is now looking to buy Debenhams in a deal world £200 million. It could see Fraser’s group operate Debenhams stores on 12-month licenses.
Mike Ashley has long been interested in buying Debenhams. He made various attempts to take over the retailer in 2019. Frasers Group was also among the names bidding before it dropped out last month leaving JD Sports in exclusive talks.
After those talks collapsed last weekend Ashley appears to have returned to the table with a last-ditch offer.
The news raises hopes that thousands of jobs could be saved. However, Fraser Group’s Finance Director sounded a note of caution. The current deal, he said, could be at risk due to Arcadia’s Administration and a lack of reform on business rates.
“We [Frasers Group] hope to be able to save as many jobs as possible,” he told The Sunday Times.
“However, we have found that Debenhams has been overly reliant on Arcadia for many years, and with the administration of Arcadia last week, as well as no end in sight to the outdated business rates regime which unduly punishes the likes of Debenhams, it may be a bridge too far.”
When JD Sports dropped out of talks last week, Debenhams announced its administrators had started winding down operations. However, they were continuing to seek offers ‘for all or parts of the business’. Options included a further restructure of operations going forward or the orderly wind-down of the business.
(Written by Tom Cropper, Edited by Klaudia Fior)