Mike Ashley slams Debenhams’ rescue plan as “not workable”

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Mike Ashley Debenhams
// Sports Direct CEO Mike Ashley slams Debenhams for rejecting latest attempts to gain control
// Billionaire says Sports Direst made several offers to put Debenhams on a more secure footing
// Says Debenhams’ rescue plan from lenders’ £200m cash injection was “not workable”

Sports Direct boss Mike Ashley has lashed out at Debenhams for rejecting his latest attempt to gain control of the embattled department store retailer.

The retail tycoon said Debenhams’ refunding plan, which could result in wiping out equity for shareholders, was “not a workable solution”.

On Friday, Debenhams announced it had secured £200 million in new funding from its lenders and was now seeking to pursue a restructuring plan.

It warned that some restructuring options it could pursue, such as a debt-for-equity swap or a pre-pack administration process, would wipe out existing shareholders – including Ashley.

The billionaire has a 29.7 per cent stake in Debenhams’ through his Sports Direct retail empire, making him the department store’s biggest shareholder.

“If guidance as to what might represent a workable solution for Debenhams could result in no equity value for Debenhams’ current shareholders, from Sports Direct’s perspective and that of Debenhams’ wider stakeholders, that is not a workable solution,” Sports Direct said in a stock market update this morning.

Sports Direct also said it had made several offers to Debenhams to help put it on a more secure footing, including a £150 million loan and the purchase of Debenhams’ Danish business Magasin Du Nord for £100 million.

Ashley’s firm urged Debenhams to reconsider these offers, arguing that its proposals were better than the “multiple insolvency processes” Debenhams was considering as it looks to restructure.

“The offer for Magasin is one of several offers that Sports Direct has made to provide the board of Debenhams with a valid alternative to its apparent view that that multiple insolvency processes are required to address Debenhams’ current liquidity concerns and to facilitate a wider balance sheet restructuring,” Sports Direct said.

As part of the plan, Ashley would become chief executive of Debenhams.

Debenhams has already dismissed Ashley’s alternative proposals, arguing that they did not address the department store’s funding and restructuring requirements.

It added that tycoon’s appointment as chief executive would be a conflict of interest given Sports Direct’s ownership of House of Fraser.

However, Sports Direct said this morning that it did not consider House of Fraser to be a competitor of Debenhams.

“In any event, were Mr Ashley to become chief executive of Debenhams, he would, as previously announced, step down from his roles at Sports Direct,” it said.

“He would also be subject to fiduciary duties to Debenhams.

“Sports Direct would strongly recommend that the Debenhams board reconsiders the offers made by Sports Direct to date and their own duties as directors of Debenhams.”

Shares in Debenhams were down over 18 per cemt at 1.3p in morning trade.

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