Billionaire Businessman Mike Ashley opened his first Sport and Ski shop in Maidenhead in the 80‘s. Funded by private money, the 90s saw his small business become rebranded to Sports Soccer and opened more than 100 stores across the United Kingdom, in recent years the name changed to Sports Direct.
However they have now sold their £33mn stake in Debenhams, after only a month of acquiring it, making a profit of well over £2 million after the shares have risen by 6% over the month.
The Financial times stock exchange 100 bought a 4.6% stake, and has just sold it, in return for a “put” option over 6.1% of the department store retailer‘s shares. This resulted in immediate increased exposure.
Sports Direct is required to transfer cash collateral to cover its obligations under the Put Option. The amount of collateral required during the life of the Put Option can increase or decrease by reference to the underlying market price of Debenhams‘ ordinary shares. After taking into account the premium it will receive, the Group‘s maximum exposure under the Put Option is limited to approximately £46 million.
Since the sportswear company first invested in Debenhams in January, shares have fallen 22.5%.
May this year, Mike Ashley put his personal wealth at £3.75bn – making him richer than Sir Richard Branson.
Sports Direct continues to work together with Debenhams and looks forward to building a long-term relationship.