Debenhams plans to raise £323m via a share placing in a bid to slash its debt levels of £927m.
Debenhams said it would raise the money by an open offer and placing of new shares. It is selling 40%of the stock in a firm placing and the remaining 60% will be offered to the market today.
Raising the money will also give Debenhams an opportunity to amend its existing debt covenant package to give the business “greater headroom”, increase the retailer’s flexibility to buy back existing debt and improve its ability to pursue acquisition of retail assets.
The shares are expected to be priced between 75p to 80p.
Debenhams also updated the market on trading and said that for the 12 weeks to May 23, profits at the business were running ahead of last year and like-for-like sales were down 0.8%.
Debenhams added that its own label and Designers at Debenhams ranges had performed well over the period, resulting in a 90 basis points gross margin gain.
Debenhams chief executive Rob Templeman said: “Our priorities for running Debenhams are unchanged with a strong focus on the levers that deliver cash margin. Despite facing strong comparatives achieved in May last year and the ongoing difficult retail environment, we have made further progress in the 12 week period in
terms of total sales and profits.”
He added that despite the outlook on consumer confidence looking unclear, the board remained confident on trading strategy and the out turn for the full year.