Debenhams on the verge of sealing £200m funding from lenders

Debenhams is close to receiving a £200m lifeline from lenders that would prevent the department store falling into the hands of largest shareholder Mike Ashley. 

A deal finalising its borrowing facilities, which are larger than expected, could be announced as soon as today, according to Sky News. 

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The retail chain said earlier in the month that it was in "advanced negotiations with its current lenders about additional facilities of approximately £150m".

The figure has increased by £50m after Ashley's company, Sports Direct International, offered an unsecured loan of £150m to Debenhams. 

But that offer came with a catch that would see Sports Direct take on a further five per cent of the company's shares and make Ashley chief executive. 

Lenders have ruled out that deal while the new £200m proposal would allow the department store chain to trade through the rest of the year and provide time to restructure its finances.

It could see Debenhams placed into a pre-pack administration and sold to its lenders, with FTI Consulting lined up to handle that process. 

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If that option was pursued it would also likely result in a debt-for-equity swap to cut the chain's £560m debt and the closure of stores not making any profit. 

Under current plans up to 20 stores could close early next year, with dozens more identified as potential closures.