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Debenhams Group has raised £40m in a share placing to fund its turnaround plan and to cut debt. The retail group, which owns Debenhams, Boohoo, Warehouse and Karen Millen among others, initially aimed to achieve £35m from the process.
The group said investor demand was "significantly in excess" of its original target and it raised £40m meaning it will achieve net proceeds of approximately £38.7 million after expenses associated with the fundraise. Trading of the newly issued shares will begin on the alternative stock market AIM on 23 February.
Group CEO Dan Finley said support had come from new and existing shareholders. "The success of the fundraise demonstrates the strength of support for our multi-year turnaround strategy. The fundraise will deliver an improved capital structure for the Group, providing us with greater financial flexibility to execute our turnaround strategy and deliver value for all shareholders," he said.
Debenhams also announced that Non-Executive Director and Chair of the Renumeration Committee Iain McDonald would be stepping down with immediate effect, facilitating participation in the fundraise by certain funds he manages. There are no plans to add further to the independent board, following the appointment of Tom Handley last year and Tim Morris' transition to the role of independent Chair in 2024.
Dan Finley, CEO at Debenhams Group
Dan Finley, Boohoo co-founder Mahmud Kamani (together with his close relatives and related trusts), and Iain McDonald all participated in the fundraise and have subscribed for an aggregate of 61,944,443 New Ordinary Shares. Kamani's investment totalled £8m, McDonald's £3m and Finley's £150,000.
McDonald said it has been "a pleasure to be a non-executive director at Debenhams over the last 9 years and I am delighted to support the Company in the Fundraising."
"This should be viewed as a measure of how much I believe the current market valuation of the business undervalues its future prospects. Dan has transformed the cost base and business model since being installed as CEO and with the re-basing of the business to a profitable core now largely complete, the prospects for strong growth and cash generation are the best for many years. I have confidence in the Board and wider management team on delivering its turnaround. I look forward to watching the continued momentum of the business as a supportive investor," he added.
As part of its turnaround the group has previously said it was continuing to explore opportunities to help drive an “asset-lite model”, such as selling non-core assets, supply chain partnerships, strategic IP licensing and other financing options.
It is also reducing its property costs, telling shareholders that lease costs are set to reduce from £17m this financial year to around £13m next year; will fall by a further £6m when the lease on a vacant US property expires. The group also plans to cut its capital expenditure from £16 million over the past year to around £8m.
A proposed sell-off of the PrettyLittleThing brand, founded by Mahmud Kamani's son Umar, has been halted.
Main image: Boohoo