Debenhams cash call wins support

Debenhams today said existing shareholders had taken up a third of its share offering in a £323m (€378m) fundraising.

The department store chain hopes to use the cash to shrug off its debt woes and help it to take advantage of opportunities in the recession.

It said around 30.3% of the shares had been accepted by current holders, with the remainder sold to other institutional investors at 80p per share.

Debenhams, which had debts of £971.1m (€1.1bn) at the end of April, has said the fundraising was motivated by investors’ fears over its level of indebtedness rather than by any concerns over the performance of the chain.

Shareholders have had a turbulent time since the firm emerged from private ownership in 2006.

The share price plummeted to a low of 20.5p last year – around a tenth of the original asking price – but it has now climbed to around 76.25p.

The fundraising will mean that private equity firms Texas Pacific Group (TPG) and CVC Capital Partners will see their combined stake reduced from 20% to 15%.

They floated the business on the stock exchange after taking it private in 2003 and saddling it with £1bn (€1.16bn) in debts. A third investor, Merrill Lynch, sold out last year.

TPG and CVC will also remove their representatives from the board as a result of the dilution.