Sports Direct in £150m loan offer to Debenhams
Mike Ashley's Sports Direct has accused the Debenhams board of "deliberately misleading" the market as the retail tycoon continues to pile the pressure on the struggling high street firm.
Ashley's Sports Direct, Debenhams' biggest shareholder with close to a 30 percent stake, made its unsecured loan offer late on Wednesday with conditions that include the appointment of Ashley as chief executive.
Debenhams added that any third party loan offer on these terms would "require both the consent of our RCF lenders and noteholders and material amendments to existing facilities".
In a statement, Debenhams said that its board will give "careful consideration" to the proposal and will "engage with Sports Direct and other stakeholders regarding its feasibility in the interests of all parties". Articles appear on euronews.com for a limited time. If not, the loan would bear interest at 3 percent.
"Debenhams would agree to put a proposal to its independent shareholders to approve the issue of circa 5% new shares at the prevailing market price to Sports Direct (so as to increase Sports Direct's shareholding to circa 35%)".
Debenhams had also said in January that it continued to generate cash, but Ashley's company said a £40m loan announced "a mere five weeks later" called that into question.
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Debenhams said it rejected Sports Direct's complaints, describing them as unfounded and self-serving.
Two days after the latest profit warning, Ashley took matters into his own hands with an audacious bid to axe most of Debenham's directors and appoint himself to the board.
The letter provides an insight into the toxic relationship that has developed between the two sides, revealing that Sports Direct reported Debenhams to the UK Listing Authority and the financial services regulator after being given a preview of the planned profit warning. Last week, he launched a move to take over running the ailing company.
Eight weeks later, the retailer warned that its profits would be lower after a hit to sales in the 18 weeks to January 5.
Sports Direct is trying to turf out all but one of the group's directors and install Ashley, its founder and chief executive, as CEO. Previous year he bought both House of Fraser and Evans Cycles, and has previously been linked to bids for Patisserie Valerie and HMV.
Earlier this week Debenhams confirmed it is in advanced talks to borrow £150 million as part of efforts to stay afloat.
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