Belinda Earl, Debenhams’ chief executive, is one such manager. Under the terms of the department-store group’s proposed £1.54 billion public-to-private deal, Earl and her top team are putting in £2m for a 6.9% stake in the new company.
But that £2m “investment” is being funded by Earl and her colleagues cashing in share options and stock in Debenhams — triggered by the takeover they are helping to plan, and paid for by Permira and its bidding partners.
“Does she have to put her house on the line? No,” said one adviser to Earl. Bosses involved in buyouts often have to hand over part of their savings to buy a stake in the new company.
If Permira’s bid succeeds, Earl will make £2.51m from her shares and options. After tax, she will be left with at least £1.51m. Earl will put £800,000 of this into the new vehicle, alongside four boardroom colleagues, who will invest the remaining £1.2m from their own option and share windfalls.
Permira and Blackstone, two of the bid’s main backers, are known to be irritated with the terms of Earl’s deal.
Advertisement
“What worries us is how little she is prepared to put in,” said one source.
Permira will have 37.5% of the new company, with Blackstone and Goldman Sachs each getting 20.8%. The beneficiaries of 10.9% have not yet been disclosed.
A major participant is thought to be Stuart Rose, who is set to become chairman of Debenhams if the Permira bid is successful. His sidekick Charles Wilson is also thought likely to have received a substantial stake.