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Debenhams renegotiates with banks

Debenhams has rejigged lending terms with its banks to prevent it from breaching covenants.

According to a report in The Sunday Telegraph the department store group has given itself "more headroom" on some of the covenants.

Debenhams is understood to have renegotiated debt at the same rate of interest but extended the period over which it will pay off its £1 billion worth of borrowings.

Debenhams was floated on the stock exchange in 2005 by its then private equity owners CVC, TPG and Merrill Lynch Private Equity, but subsequently suffered a significant downturn in trading and its share price. The company has issued three profit warnings in the last 12 months and has been held up as an example of the damage private equity can cause by buying businesses and loading them up with debt.

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