July 26, 2021

Reliance won’t buy out Debenhams, which could lose its Oxford Street store

Translated by

Paul Kaplan

Published on

13 oct. 2020

The list of potential candidates for the takeover of Debenhams is shrinking: Reliance Retail has thrown in the towel. Reliance, a group controlled by India’s richest man, had been seen as one of the frontrunners in the race to buy the struggling UK department store giant last month. At the time, the rumor of his candidacy had also created surprise.

Photo: Sandra Halliday

But the British daily The Times, who quotes a source familiar with the matter, indicates that Reliance is no longer involved in the process, while specifying that “several parties” are still interested in the auction of the British group.

The Debenhams company had requested to be placed under “light” administration in April, during lockdown in the United Kingdom. But the exit from this regime turned out to be more difficult than expected, because frequentation of retail businesses remains low across the Channel.

The Debenhams chain is currently owned by a pool of its creditors, including US hedge funds and banks. If the sale process fails and the company must be liquidated, Hilco Capital has been appointed to lead the process.

These rather gloomy news comes with two encouraging points: on the one hand, the company has experienced better than expected commercial activity in recent months (although the situation remains difficult), and on the other hand, its status bankruptcy would allow it, if taken over by a new owner, to abandon its non-viable stores in a relatively straightforward process.

The company has already closed a number of stores, and successful competitors, such as Next, have taken the opportunity to take over the vacant premises. In fact, the company may be forced to abandon some of its top locations.

The Times indicates that its flagship store on Oxford Street, which since 2016 has belonged to the former president of H&M and the richest man in Sweden, Stefan Persson, through his investment vehicle, Ramsbury, could be concerned.

The businessman would indeed “intend to exercise a termination clause of the lease at the end of the year. [Stefan Persson] has appointed real estate agents to find a temporary tenant while he draws up redevelopment plans for the site, “the daily reported.

While the London site is extremely expensive and suffers from low footfall at the moment, it remains a real magnet in normal times, and plays an important role in the sales of luxury beauty products, which are crucial for Debenhams. .

If the retailer were forced to abandon its flagship store, the retail space could be reduced by its current owner. Mike Ashley, the boss of Frasers Group (Sports Direct), former main shareholder of Debenhams before it was taken over by his creditors, would be interested and would seek to take over other sites of Debenhams to set up his brands there.

The Danish subsidiary of Debenhams, Magasin du Nord, which is seeing better days, is sold under a separate procedure.

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