Mike Ashley has reportedly written a letter to Debenhams chief executive Sergio Bucher in which he claimed the department store had “zero chance of survival” if they didn’t accept his £40 million loan.
In the letter, first seen by The Daily Telegraph, Ashley urges Bucher to accept the interest-free loan from Sports Direct, which has a 29.7 per cent stake in Debenhams.
Ashley also claimed speculation points towards the company having “zero chance of survival” and warned that Debenhams faced collapse without urgent action.
“If I’m sounding extremely frustrated – well I am,” Ashley wrote.
“We’ve seen this before, with Blacks and House of Fraser They didn’t want any help either. We don’t want to see Debenhams fail.
“It’s not in our interest to see it fail, but without something changing rapidly all of the shareholders risk getting wiped out, never mind diluted.”
Debenhams said: “We welcome Sports Direct’s proposal as a clear demonstration of their willingness to support the company.
“However, as the offer came with conditions that could affect the interests of other stakeholders, while the board does not think it could accept the proposal, as presented, it has invited Sports Direct to engage as part of our broader refinancing process.”
This is a copy of the letter Mike Ashley sent to @Debenhams yesterday proposing an interest free loan of £40 million in return for increased stake. Debenhams said no. “It’s like being offered Messi on loan and turning it down” said Ashley. pic.twitter.com/hPy0SS0hck
— Joel Hills (@ITVJoel) December 13, 2018
Shares in the department store chain dropped more than three letter on Wednesday after the letter emerged.
Earlier this year, Sports Direct further increased its stake in the department store chain, raising its interest from 23 per cent to the current 29.7 per cent.
This means Sports Direct is only three percentage points from the threshold at which it must launch an official takeover bid.
Sports Direct also has a significant stake in French Connection and just this year, it rescued Debenhams’ main rival House of Fraser in a pre-pack administration deal.