Debenhams former chair blames Mike Ashley for scuppering rescue
Mark Gifford says lenders ‘lost patience’ with Frasers boss and ended up closing stores
Debenhams’ former chair claimed a rescue of the business that could have saved dozens of stores and thousands of jobs fell through because Frasers’ head Mike Ashley persisted in trying to drive the price down.
“I know Mike very well from other discussions,” Mark Gifford told the Financial Times. “He’s a great entrepreneur and his business plan was genuinely very, very well thought-out and I think had the best opportunity for success of anything I’d heard.”
“But he ultimately also wanted to pay the lowest possible price,” he added. “We had six weeks of negotiations. There was an alternative option in Boohoo that we were also negotiating and the lenders lost patience with Mike.”
Boohoo eventually bought the brand rights, website and customer data of Debenhams for £55m at the start of this year, leaving the administrators to liquidate its stock and close its remaining 124 stores with the loss of thousands of jobs.
US hedge funds Silver Point and GoldenTree, which along with Barclays acquired control of Debenhams through a prepack administration in 2019 and remained creditors, later also sold its Magasin du Nord business to Germany’s Peek & Cloppenburg, reducing the overall losses on their investment.
“[The agreement] was there, every revision,” Gifford said of the talks with Ashley. “Three hundred pages, it was done. All [Ashley] had to do was sign it . . . it was his judgment not to sign that agreement, ultimately.
“I don’t know for certain, but I believe he thought he could still do the deal at a lower price, and would seem to spend more time pushing us into accepting a better position price-wise.”
The negotiations with Ashley came after another proposal from JD Sports, which would also have preserved many of the stores, was withdrawn.
Gifford said Peter Cowgill, JD’s executive chair, “ran a very thorough and detailed process and got everything lined up”, including support from the group’s majority shareholder, Pentland Brands.
“There was a leak. His share price crashed and he got a lot of pressure from other shareholders not to proceed with the deal. And then by the Friday, Arcadia had gone into administration, which was our biggest concession partner.”
“Those two factors — losing almost a billion pounds of market cap and the challenge of turning [Debenhams] around becoming even more difficult — meant that although Peter had tried very hard . . . he just wouldn’t get the support from the shareholders.”
“But there was over £300m sitting in his lawyer’s bank account and there was a final sale and purchase agreement.”
Frasers did not dispute Gifford’s account, and remains in discussions with a number of Debenhams’ landlords over some of its former stores. “Given the way things have gone since then, it looks like we may have dodged a bullet,” said Chris Wootton, chief financial officer.
JD Sports declined to comment. Its shares have risen by a quarter since it withdrew its proposal for Debenhams.