Debenhams confirms £35m equity fundraise to support turnaround plan

Core Viewpoint - The company plans to raise funds to enhance liquidity and achieve an optimal capital structure, aiming to reduce its net debt to adjusted EBITDA ratio to less than 2x by FY27 [1]. Fundraising and Financial Strategy - The board is in advanced discussions with the lending syndicate to improve covenant terms and increase financial flexibility, contingent on the successful completion of the planned fundraising [2]. - Directors have expressed their intention to participate in the fundraising at an issue price of 20 pence per ordinary share [2]. - The company will consult with institutional shareholders before formally launching the fundraising process [3]. Financial Performance and Projections - The board is confident in achieving £50 million in adjusted EBITDA for the financial year ending February 2026, with expectations of double-digit adjusted EBITDA growth in the following year [3]. - The company reports ongoing improvements in gross merchandise value trends and progress in reducing operational costs, with a fixed cost exit rate projected to decrease from £175 million to £130 million for FY26 [4]. Operational Improvements and Cost Management - All brands under the group are trading profitably on an adjusted EBITDA basis [4]. - Cash lease costs are expected to decline from £17 million in FY26 to approximately £13 million in FY27, with further reductions anticipated after exiting a vacant US property lease [6]. - Capital expenditure is forecasted to decrease from around £16 million this year to £8 million next year [6]. Strategic Initiatives - Following a turnaround at PLT, the company is exploring avenues for deleveraging and working capital management, including strategic IP licensing, supply chain partnerships, alternative capital financing options, and disposal of non-core assets [5]. - The planned fundraising and amended loan terms are expected to support the transition to a more asset-light business model [5].