Debenhams has received a £40m cash injection from its lenders, which will allow the struggling department store more time to find a long-term refinancing deal.
Shares in the retailer surged by as much as 45 per cent after the group reported that it had secured a 12-month credit facility which will “act as a bridge to facilitate a broader refinancing and recapitalisation”.
Debenhams has been trying to cut costs in a bid to stem losses, and last year announced plans to close 50 stores, putting thousands of jobs at risk.
The company previously turned down a £40m loan from Sports Direct owner Mike Ashley, who owns a substantial chunk of the retailer, who warned last year that the firm was on the brink of collapse.
Mr Ashley’s offer was rejected on the basis that the terms of the loan would have an impact on other investors.
Sergio Bucher, Debenhams chief executive, 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.”
Debenhams also announced on Tuesday that it has reached an agreement with Hong Kong firm Li & Fung to oversee supply chains.
The new partnership will be “a key part of our turnaround plan”, said Mr Bucher.
“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 added.
