Mike Ashley strikes again as billionaire retail tycoon offers ailing Debenhams £150million lifeline... in exchange for being put in ch
Mike Ashley strikes again as billionaire retail tycoon offers ailing Debenhams £150million lifeline… in exchange for being put in charge
- Mike Ashley’s Sports Direct has offered to loan Debenhams £150million
- In exchange, Ashley wants to be on the Debenhams board and be made CEO
- It is the latest in a string of attempts to seize control of the department store
Emily Hardy For This Is Money
The extraordinary power struggle between High Street-hungry Mike Ashley and Debenhams reached new heights last night.
Ashley’s Sports Direct has offered the struggling department store chain a much-needed £150million loan, but it comes with the audacious caveat that, in exchange, Ashley be put on the Debenhams board and also be made chief executive.
Mike Ashley’s Sports Direct has offered Debenhams a loan in its latest attempt to seize control
Rather than rebuff the loan, as it has done with previous offers, Debenhams said today it will give it ‘careful consideration’ and ‘engage constructively’ with Sports Direct.
Ashley, who already holds a 29.7 per cent stake in Debenhams, said the 12-month loan would be interest free in exchange for an extra 5 per cent chunk of equity.
This would take his holding to nearly 35 per cent – above the threshold for a compulsory takeover bid.
If shareholders do not agree to the share issue, the loan would carry a 3 per cent interest rate.
Retail analyst Nick Bubb said: ‘Amazingly, Debenhams hasn’t this time sent him away with a flea in his ear. Tactically, that might well be the right way to respond, but Debenhams would have to be desperate to take the plan seriously.’
The department store chain said any such loan would require the backing of current lenders and ‘material amendments’ to existing facilities.
Debenhams has been racing to secure a financial life line with sales continuing to trouble
It added: ‘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 would use the Sports Direct loan to pay down £40million of its existing debts, leaving it with £110million for working capital.
It is the latest in a series of twists and turns in the tussle between the two companies.
Sports Direct, which also owns Debenhams’ main rival House of Fraser, is said to be eyeing a takeover of the chain so it can seize control of the lion’s share of the department store sector.
Sports Direct also revealed on Wednesday that it had made a complaint to the City watchdog over Debenhams’ most recent profit warning.
In a letter circulated to the press late on Wednesday, Sports Direct took issue with the retailer’s statement, accusing the board of giving ‘misleading’ communications.
Debenhams branded the complaints ‘unfounded and self-serving’.
Boardroom bust up: Debenhams boss Sergio Bucher (above) was removed from the board last month and is Mike Ashley is after his job
The department chain store has been racing to secure a £150million cash lifeline to help pay down its debts and shore up its finances. It said in a profit warning earlier this month that talks with stakeholders were progressing well.
Ashley is on a High Street shopping spree. Last year the maverick businessman bought both House of Fraser and Evans Cycles, and was also linked to bids for Patisserie Valerie and HMV.
Ashley, who led a coup that saw veteran chairman Sir Ian Cheshire and Bucher ousted from the board last month, tabled a proposal last Thursday for a shareholder meeting to remove ‘all of the current members of the Debenhams board’, other than finance chief Rachel Osborne.
He pledged to step down from his role at chief executive of Sports Direct, the firm he founded, if he is installed on the Debenhams board.
The shares of both companies are in the green today, with Debenhams up more than 8 per cent.