Debenhams could go into administration within days as part of a restructuring plan that may involve store closures.
The deal will see the department store group fall into the hands of its lenders and wipe out retail tycoon Mike Ashley’s shareholding in the troubled chain.
The group, which has stores in Leeds, Sheffield, York, Bradford, Beverley, Doncaster, Harrogate, Hull and Wakefield, has given the Sports Direct chief executive just over a week to either make a firm takeover offer or provide an alternative funding pack- age.
Debenhams has now put in place a £200m refinancing plan, of which £101m will be drawn down immediately.
The firm said this would allow it to begin a restructuring process which may involve store closures and rent reductions.
The other £99m will only be made available if Sports Direct – or any other shareholder with a stake of more than 25 per cent – fulfils one of two conditions by April 8.
Under one option, Mr Ashley can make a takeover offer which includes arrangements to refinance the group’s debt.
Alternatively, he can call off the emergency meeting he has requested to install himself on the retailer’s board and commit to either providing funding for the business or underwriting the issue of new shares.
If neither course of action is taken by the deadline, the company will go into a pre-pack administration, handing control to its lenders and wiping out shareholders, including Mr Ashley’s near 30 per cent stake. This would then allow for the transfer of the £99m to the company under its new ownership.
Debenhams added that it will be contacting Mr Ashley to gauge his interest.
Debenhams’ chairman Terry Duddy said: “We will now move to the next phase of the restructuring of the business, which includes reducing rents and reshaping our store portfolio, as we have referenced in previous announcements.
“These actions are necessary to ensure the strongest possible platform to support the business going forward.”
Earlier on Friday, Mr Ashley lashed out at advisers to Debenhams after his takeover approach was snubbed.
The billionaire Sports Direct owner released a statement saying: “Now the results of the vote are known and we have also been subsequently advised that the supportive HSBC are no longer part of Debenhams’ revolving credit facility, I think that, if there were any justice in the world, the majority of the advisers would be put in prison.”
Global business advisory firm FTI Consulting has been working with lenders to Debenhams, while Lazard and KPMG have been advising the retailer itself.