Debenhams to raise cash to cut debt levels

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London: Debenhams, the private equity owned chain, is planning to raise more cash to reduce debt levels, amid worsening high street prospects, reported Financial Times. The board of Debenhams has been looking at raising equity capital to reduce its leverage, and will discuss its options to raise financing at the next board meeting in January, according to people familiar with the situation. The retailer is set to give a trading update on January 6. It is expected that the company will not come close to breaching covenants on its debt for at least another six months. However, there is an acceptance among directors that existing levels of debt are unsustainable. Two of its leading shareholders, private equity firms TPG and CVC, have been supportive of the business, but it is not clear what part they would play in any future fund raising. About 60 percent of Debenhams' 1.1 billion pound debt facility is held by four banks - Royal Bank of Scotland, HBOS, Lloyds TSB and Barclays - two of which (Lloyds and HBOS) are set to merge, making it less likely that existing lending commitments will be maintained at current levels.