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Debenhams - Relaxation of bank covenants

July 2009

Investing in shares may lose you all or some of your money. Past performance is no indication of future performance. Some of the shares recommended here may be small company shares, which can be relatively illiquid and hard to trade and this makes such shares more risky than other investments.

  • Epic Code:
  • DEB
  • Price:
  • 80.5p
Debenhams has completed a placing and open offer of new shares at 80p per share to raise £323m before expenses. The money has been used to repay some debt (leaving net debt 2x EBITDA) and although the repayment profile has not changed (£150m due May 2010 and £750m in April 2011), it will see some relaxing of banking covenant tests.CVC, part of a buyout group that took the retailer private in 2003 and returned it to the stock market three years later, has also sold about 51m shares at the same price, cutting its stake to 33.5m shares (less than 3%). Debenhams also issued a Q3 trading update, which was softer than Q2. Like-for-like sales for the 12 weeks were down 0.8% compared to the +1.9% increase that had been seen ...

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With small companies there is an above average degree of risk compared to buying blue chips. Please be aware that we have not assessed the suitability of any of these investments for you. The newsletter simply states a personal view and diarises the editor’s investment decisions. Please speak to your stockbroker or other qualified individual to ascertain whether any of these companies mentioned would form useful additions to your own portfolios. Past performance is no indication of future success.

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