Debenhams pensions unaffected by administration

Debenhams pensions unaffected by administration

The Debenhams Pension Scheme will continue to operate as normal despite the department store chain falling into administration. 

A spokesperson for the scheme confirmed that the trustees have been made aware of the administrative status of Debenhams Plc, but said the company was not the sponsoring employer. 

The relevant employer for the pension schemes is Debenhams Retail Limited and this has been transferred to a newly incorporated company which continues to trade and operate as normal, they said.

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The spokesperson added: "Members can therefore be reassured that the schemes are carrying on as usual. 

"The trustees have worked with our specialist advisers throughout the process of the company’s refinancing and restructuring, to ensure that members’ interests are taken into account, and we have consulted closely with The Pensions Regulator and the Pension Protection Fund at every stage.

"We are in the process of writing to all members with further information, and we will continue to keep them informed."

On April 1 Debenhams negotiated a £200m refinancing deal for its pensions, which is believed to be unaffected by the latest developments.

The agreement includes a £101m payment and a further £99m subject to one of several milestones being reached. The deal also replaced the £40m of interim borrowing announced on February 12.

Debenhams PLC confirmed it had entered administration today (April 9, 2019), in spite of a last minute equity bid from Sports Direct boss Mike Ashley. 

The billionaire had put forward a rescue offer of £200m that could have delayed the chain’s administration. 

The proposal involved underwriting a rights issue that would have seen investors purchasing newly issued shares. 

In addition, the lenders would have had to agree to write off £82m of Debenhams’ debt of £720m. 

An initial £150m plan put forward by Mr Ashley on Monday April 8 was rejected. 

Laith Khalaf, senior analyst at Hargreaves Lansdown, said: "It’s game over for Mike Ashley and Debenhams shareholders. The writing’s been on the wall for some time now, and while Sports Direct persisted with attempts to rescue the retailer, its terms proved unacceptable to Debenhams and its lenders.

"Debenhams has been one of the most shorted shares on the UK stock market for some time, and the hedge funds who bet against it have now recorded a maximum win, the shares cannot fall any further."

Debenhams floated on the stock market 13 years ago in May 2006 at a price of £1.95 per share, valuing the company at £1.7bn. 

George Charles from Money Saving Heroes added: "The high street today has taken a massive hit in Debenhams going into administration. It is still a favourite among the consumers that do take to the high street, whether regularly or occasionally, and is going to be one of the biggest hits the high street has seen so far.

"Stores will remain open for the foreseeable future, but as it’s now in the hands of the lenders, it’s only a matter of time before stores begin to close, changes are made to decrease the debt and consumers feel the brunt of this."