Mike Ashley’s Sports Direct proposes £61.4m offer for Debenhams

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Mike Ashley Debenhams
// Sports Direct is considering tabling a £61.4m offer for Debenhams
// Offer would be for 70% of shares that Sports Direct boss Mike Ashley does not already own
// Offer also subject to installing Ashley as Debenhams CEO
// Sports Direct won’t make a firm offer until Debenhams agrees not to enter any new funding arrangements or insolvency process

Sports Direct has announced that it is mulling the possibility of tabling a takeover offer of £61.4 million for Debenhams.

The retail company, which is majority-owned by Ashley, said its “possible firm offer” would be for the remaining 70 per cent of shares in the beleaguered department store chain that it does not already own.

Ashley would pay 5p per share, or £43 million, adding it would also assist Debenhams in addressing its immediate funding requirements.

The offer was also subject to conditions, such as Debenhams immediately appointing Ashley as its chief executive.

Sports Direct also said Debenhams must terminate the noteholder consent solicitation process it announced last Friday, referring to plans to seek permission from the bond holders for a £200 million cash injection.

Debenhams had warned that the restructuring options it could pursue once the cash injection comes through, such as a debt-for-equity swap or a pre-pack administration process, would wipe out existing shareholders such as Ashley.

With a stake of almost 30 per cent, Ashley is Debenhams’ biggest shareholder and Sports Direct had earlier criticised Debenhams’ financing plans, stating that it was not a “workable solution”.

Sports Direct said it would not make a firm offer until the department store agreed not to enter any new funding arrangements or insolvency process.

“Debenhams shareholders, both major and minority, are sick and tired of being ignored, cast aside and trampled underfoot by the lenders of Debenhams who through the incompetence, or worse collusion, of the board, are allowing these critical stakeholders in the business to be wiped out, this is the shareholders chance to fight back,” Sports Direct deputy finance chief Chris Wootton said.

“We reiterate our prior comments that we will leave no stone unturned in pursuing those responsible for this long-planned theft.”

Debenhams has so far resisted multiple overtures by Ashley and his company.

Yesterday, the heritage department store said it would give any acquisition offer from Ashley and Sports Direct “due consideration” – but reiterated that it would continue with emergency funding plans.

Debenhams said given the “timetable associated with any public offer”, a bid from Sports Direct would not address its immediate financing needs.

Sports Direct has until 5pm on April 22 to announce a firm intention to make a takeover bid or walk away, as per City rules.

Debenhams added that any proposal from Sports Direct needed to have an indication of the offer price, a clear plan of how Debenhams’ existing debt would be repaid and how it would address the immediate funding needs.

Sports Direct previously hit out at the department store for rejecting several other offers to help put Debenhams on a more secure footing, including a £150 million loan and the purchase of Debenhams’ Danish business Magasin Du Nord for £100 million.

Debenhams already dismissed these alternative proposals.

Ashley also requisitioned a shareholder meeting with the goal of clearing out the board, save for finance boss Rachel Osborne, and installing himself on it.

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