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What happens to Debenhams now? | What happens to Debenhams now? |
(about 2 hours later) | |
Debenhams' much anticipated slide into administration has finally come to pass. | Debenhams' much anticipated slide into administration has finally come to pass. |
The chain is now in the hands of its lenders. | The chain is now in the hands of its lenders. |
Not for long though - those lenders, Barclays and Bank of Ireland, as well as hedge funds Silver Point and GoldenTree, will now try to sell the business as soon as possible. | Not for long though - those lenders, Barclays and Bank of Ireland, as well as hedge funds Silver Point and GoldenTree, will now try to sell the business as soon as possible. |
So what do we know about these lenders and who might be lining up to buy Debenhams? | So what do we know about these lenders and who might be lining up to buy Debenhams? |
Who are the current owners? | Who are the current owners? |
Barclays and Bank of Ireland are familiar names in the UK and need little introduction. | Barclays and Bank of Ireland are familiar names in the UK and need little introduction. |
But Silver Point Capital and GoldenTree Asset Management are less well known. | But Silver Point Capital and GoldenTree Asset Management are less well known. |
GoldenTree was set up in 2000 and has offices in New York, London, Singapore and Sydney. | GoldenTree was set up in 2000 and has offices in New York, London, Singapore and Sydney. |
It specialises in high-risk, high-reward investments. Last November, it bought Johnston Press, after the owner of the i newspaper and the Scotsman went into administration. GoldenTree was the firm's biggest lender. | It specialises in high-risk, high-reward investments. Last November, it bought Johnston Press, after the owner of the i newspaper and the Scotsman went into administration. GoldenTree was the firm's biggest lender. |
Silver Point Capital is of a similar ilk. It is a newer business than GoldenTree, and was formed by two former Goldman Sachs partners. | Silver Point Capital is of a similar ilk. It is a newer business than GoldenTree, and was formed by two former Goldman Sachs partners. |
It also focuses on the type of special situations investments favoured by its fellow Debenhams-backer. | It also focuses on the type of special situations investments favoured by its fellow Debenhams-backer. |
So who might buy Debenhams? | So who might buy Debenhams? |
Mike Ashley has made clear his interest in buying the store chain all along, despite being repeatedly rebuffed by Debenhams' board. | Mike Ashley has made clear his interest in buying the store chain all along, despite being repeatedly rebuffed by Debenhams' board. |
He isn't giving up. | He isn't giving up. |
Sports Direct has formally registered its interest with the chain's interim owners, deputy chief financial officer Chris Wootton told the BBC. | Sports Direct has formally registered its interest with the chain's interim owners, deputy chief financial officer Chris Wootton told the BBC. |
However, Mr Wootton doesn't expect them to succeed at this stage either. | However, Mr Wootton doesn't expect them to succeed at this stage either. |
"The way this has all been set up suggests to us [the owners] already have a plan in place to sell it to a third party, not us." | "The way this has all been set up suggests to us [the owners] already have a plan in place to sell it to a third party, not us." |
Mr Wootton suggests "various retailers" would be interested in buying Debenhams, including another big name from the UK High Street, Topshop-owner, Sir Philip Green. | Mr Wootton suggests "various retailers" would be interested in buying Debenhams, including another big name from the UK High Street, Topshop-owner, Sir Philip Green. |
A BBC source says Sir Philip is not interested in buying the chain, however. | A BBC source says Sir Philip is not interested in buying the chain, however. |
Maureen Hinton, retail research director at GlobalData, suggests Philip Day, owner and chief executive of Edinburgh Woollen Mills as a potential bidder. | Maureen Hinton, retail research director at GlobalData, suggests Philip Day, owner and chief executive of Edinburgh Woollen Mills as a potential bidder. |
Mr Day owns a number of other well-known brands, including Peacocks and Jaeger, and earlier this month he put in a bid for struggling fashion chain Bonmarché. | Mr Day owns a number of other well-known brands, including Peacocks and Jaeger, and earlier this month he put in a bid for struggling fashion chain Bonmarché. |
"Philip Day is developing a department store concept, so he might want to take some of their stores," says Ms Hinton. However she says the whole chain might prove too big for Mr Day. | "Philip Day is developing a department store concept, so he might want to take some of their stores," says Ms Hinton. However she says the whole chain might prove too big for Mr Day. |
That's the problem, agrees Diane Wehrle, marketing and insights director at retail intelligence experts Springboard. It's a tall order expecting anyone to take on a chain the size of Debenhams at a time when bricks and mortar retail is struggling. | That's the problem, agrees Diane Wehrle, marketing and insights director at retail intelligence experts Springboard. It's a tall order expecting anyone to take on a chain the size of Debenhams at a time when bricks and mortar retail is struggling. |
"Potentially Amazon? They're putting their toe in the water," says Ms Wehrle. | "Potentially Amazon? They're putting their toe in the water," says Ms Wehrle. |
But Amazon takes a "pragmatic" approach, she says, and might not have the appetite for a large network of stores. | But Amazon takes a "pragmatic" approach, she says, and might not have the appetite for a large network of stores. |
Instead some stores, in particular the smaller ones, could be sold off piecemeal to retailers who want to expand, such as Primark, Aldi or Lidl, she suggests. | Instead some stores, in particular the smaller ones, could be sold off piecemeal to retailers who want to expand, such as Primark, Aldi or Lidl, she suggests. |
Mike Ashley - thwarted saviour of Debenhams or serial sinner? | Mike Ashley - thwarted saviour of Debenhams or serial sinner? |
Mike Ashley is one of the UK's most talented and successful retailers. He turned a single store and £10,000 into a billion pound empire. | Mike Ashley is one of the UK's most talented and successful retailers. He turned a single store and £10,000 into a billion pound empire. |
He has put his hand in those deep pockets to offer a last chance to a series of High Street retailers who seemingly had nowhere else to turn. | He has put his hand in those deep pockets to offer a last chance to a series of High Street retailers who seemingly had nowhere else to turn. |
In recent years he has often been "around the hoop" (a basketball metaphor often used by merger and acquisition bankers) when well-known consumer brands and chains have been up for sale. | In recent years he has often been "around the hoop" (a basketball metaphor often used by merger and acquisition bankers) when well-known consumer brands and chains have been up for sale. |
He bought House of Fraser, Evans Cycles, Flannels and others outright and amassed a nearly 30% stake in Debenhams, before seeing the £150m he spent on it go up in smoke when the lenders took control on Tuesday. | He bought House of Fraser, Evans Cycles, Flannels and others outright and amassed a nearly 30% stake in Debenhams, before seeing the £150m he spent on it go up in smoke when the lenders took control on Tuesday. |
But his claim that the Debenhams administration is "nothing short of a national scandal" has raised eyebrows and reasonable questions about the Sports Direct tycoon's right to be considered a thwarted saviour of yet another High Street victim. | But his claim that the Debenhams administration is "nothing short of a national scandal" has raised eyebrows and reasonable questions about the Sports Direct tycoon's right to be considered a thwarted saviour of yet another High Street victim. |
Read Simon's blog here. | Read Simon's blog here. |
What would a new owner do with Debenhams? | What would a new owner do with Debenhams? |
Mr Wootton says that if Sports Direct took over the chain, they would keep more than 90% of stores open. | Mr Wootton says that if Sports Direct took over the chain, they would keep more than 90% of stores open. |
"We'd obviously look to invest in the stores, because they look very tired," he said. He suggests thousands of jobs could be saved. | "We'd obviously look to invest in the stores, because they look very tired," he said. He suggests thousands of jobs could be saved. |
The chain has 166 stores, which initially at least will all continue to trade. But it also has £621m of debt. | The chain has 166 stores, which initially at least will all continue to trade. But it also has £621m of debt. |
The current plan is to renegotiate the rents on some of its stores, while around 50 have already been earmarked for closure starting next year. | |
Ms Wehrle says any purchaser would be looking at slimming down the "huge number of stores" in the chain. | Ms Wehrle says any purchaser would be looking at slimming down the "huge number of stores" in the chain. |
GlobalData's Maureen Hinton agrees that even Mike Ashley would thin store numbers, and argues Debenhams would need significant investment if it wants to compete with John Lewis. | GlobalData's Maureen Hinton agrees that even Mike Ashley would thin store numbers, and argues Debenhams would need significant investment if it wants to compete with John Lewis. |
"Merging it with House of Fraser could be a benefit [thanks to] the economies of scale... [offering] greater bargaining power with suppliers and landlords," she suggests. | "Merging it with House of Fraser could be a benefit [thanks to] the economies of scale... [offering] greater bargaining power with suppliers and landlords," she suggests. |