Department store chain sells new shares to reduce £970m debt and help fund future expansion.
Debenhams sold 404m new shares yesterday - about 31.4% of the company's enlarged share capital - raising gross proceeds of £323m.

The move, announced by the board yesterday, aims to reduce Debenhams' absolute level of net debt and "enhance the company's ability to refinance in the future".

The retail chain also hopes to fund expansion plans and allow it to "pursue opportunistic acquisitions of retail assets, which may become available if the economic downturn persists."

Investors, believed to include all of Debenhams' existing shareholders, paid just 80p per share - a 13.3% discount on the closing price as at Wednesday, June 3.

Private equity firms TPG and CVC, which owned 12.8% and 8.4% in Debenhams, did not take part in the open offer of shares, and therefore saw their shareholdings shrink after yesterday's proceedings. CVC Shareholder Group sold 51m shares at the issue price, reducing its holding to 33.5m shares.

Debenhams chief executive Rob Templeman said: "The...capital raising together with the cash generation of this business will substantially reduce the group's net debt position and it gives us operational and financial flexibility for the future. We believe that the...transaction is the right thing for the company and its shareholders."

Debenhams also released its interim management statement for the 12 weeks to May 23, which revealed that like-for-like sales were down 0.8%, while gross transaction value was 3% higher than the same period last year.

Of the results, Mr Templeman said: "Despite facing strong comparatives achieved in May last year and the ongoing difficult retail environment, we have made further progress in the 12-week period in terms of sales and profits."

Debenhams opened a new department store in Bury St Edmunds during the 12-week period, creating 800 new jobs.