Published: Sat, March 16, 2019
Economy | By

Sports Direct offer £150m loan to Debenhams

Sports Direct offer £150m loan to Debenhams

Sports Direct has offered Debenhams an alternate £150m deal, just days after the troubled high street retailer revealed it was in crunch talks with its lenders over a bailout of the same amount.

Beleaguered retailer Debenhams has said it will give "careful consideration" to a £150 million loan proposal from Mike Ashley's Sports Direct amid an escalating row between the pair.

"If the 5% share issue and related "whitewash" was approved by Debenhams' independent shareholders, the £150m loan would be guaranteed to be interest-free".

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.

"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". Without the equity, the loan would bear interest at 3 percent.

They said, "Nevertheless, the 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".

Debenhams said in a statement: "We reject these unfounded and self-serving complaints".

Under the terms of the loan offer, Debenhams shareholders would vote on whether to issue new shares to Sports Direct, taking its holding to 35%.

The letter claimed that the board and chief executive of Debenhams had "no place leading a plc or in making public statements to the market", as its 10 January statement had proved "at best impossibly optimistic or at worst deliberately misleading" given that it had soon after put out a profits warning despite an improvement in sales performance.

In January Debenhams said it was "on track" to deliver current year profits in line with market expectations.

Ashley, one of Britain's most famous and unorthodox businessmen and owner of the Newcastle United soccer club, last week launched a coup to take charge of Debenhams, seeking a shareholder meeting to remove most of its board and install himself in an executive role.

The letter was also shared with the Financial Conduct Authority (FCA), in a move Sports Direct described as putting its concerns on record.

Debenhams rejected a 40 million pound loan offer from Ashley in December.

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