Debenhams comments on the company voluntary arrangement (CVA) proposals which were announced.
Commenting on the company voluntary arrangement (CVA) proposals announced earlier today by Debenhams, Jim Tucker, a senior restructuring partner at KPMG and proposed supervisor of the CVAs, said: 'Today's announcement marks the next phase of Debenhams' financial and operational restructuring strategy, following the comprehensive funding package announced at the end of March. If approved, and with the support of lenders and landlords, the CVAs will allow the business the flexibility to implement its turnaround strategy with a store estate that reflects the current UK retail environment.'
Debenhams currently trades from 166 stores across the UK via two companies, Debenhams Retail Limited and Debenhams Properties Limited. The CVA proposals divide these stores into categories as follows: For a total of 39 stores, the leases will be retained at current rents.
22 stores will have rent reductions of approximately 50% until Q1 2020, after which the stores are expected to close.
The balance of the chain will see varying rent reductions ranging from 25% to 50%.
All compromised leases will have mutual landlord and tenant break clauses during the five year term of the CVA. A further 7 non-retail site leases will also have varying rent reductions and early lease breaks.
Under these proposals, no stores will close on day one, suppliers will continue to be paid by the company on time and in full, and terms of employment are not impacted. The stores in the Republic of Ireland are not impacted, nor is the international business.
Debenhams needs to secure at least 75% creditor approval by value for each of the CVAs for them to proceed. Detailed proposal documents will be made available to creditors via a dedicated website today. The creditors will vote on the CVA on 9 May 2019. Consultations have already taken place with key creditors and KPMG will spend the coming weeks in further talks with key creditors to ensure they understand the full detail of the proposal.
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About KPMG in the UK
KPMG LLP, a UK limited liability partnership, operates from 22 offices across the UK with approximately 16,300 partners and staff. The UK firm recorded a revenue of GBP2.338 billion in the year ended 30 September 2018. KPMG is a global network of professional firms providing Audit, Tax, and Advisory services. It operates in 154 countries and has 200,000 professionals working in member firms around the world. The independent member firms of the KPMG network are affiliated with KPMG International Cooperative ('KPMG International'), a Swiss entity. Each KPMG firm is a legally distinct and separate entity and describes itself as such.
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