Potential suitors to buy struggling department store chain Debenhams have been given until the middle of this week to make a £300m to rescue the retailer.

Advisers for the stricken retailer have turned the heat up on potential buyers by issuing the ultimatum, while considering other options from the retailer including selling parts of the business or liquidating it completely, according to The Times.

Prospective buyers for the firm include the Mike Ashley-owned Frasers Group but there are growing fears about the future of Debenhams and its 12,000 staff. 

Debenhams collapsed into administration for the second time in a year in April in a bid to prevent being wound up by its creditors. 

While a bid of around £300m would be enough to secure the retailer, the list of potential suitors has shortened after Indian giant Reliance Retail pulled out earlier this month. 

Frasers have reportedly tabled a £125m offer for the business and Ashley is thought to be concerned by Debenhams’ perceived lack of transparency in trading, store closures and stock value.

He is also reportedly annoyed by the £150m he lost in a debt for equity swap when the retail chain first fell into administration in April 2019. 

The sale of Magasin du Nord’s seven Danish stores is being marketed in a separate sales process by investment bank Lazard. 

Earlier this month, Debenhams chair Mark Gifford insisted the business “was not on a cliff edge”. 

He told the BBC: ”We are sitting with over £95m in the bank, more than £50m higher than we expected to have when we went into administration. That’s really changed the whole complexion and prospects.”

Gifford also played down the importance of striking a deal before the end of the month. “Because we’ve been able to build this amount of cash within the company, the administrator can work with the management team to continue to trade the business,” he said.

Topics