// Sports Direct urges Debenhams shareholders to rebel against a £200m funding lifeline
// Debenhams said the £200m refinancing “would provide liquidity headroom” in new loans from existing lenders
// Ashley has sent 25 letters to Debenhams staff explaining allegations of wrongdoing
Sports Direct has urged Debenhams’ shareholders to take action against a £200 million funding lifeline.
The Mike Ashley-owned retail company also called on other shareholders to send letters to Debenhams to resist the department store’s refinancing plans.
On Friday, Debenhams revealed that it had completed a £200 million refinancing, dealing another major blow to Ashley’s attempts to seize control of the department store chain.
Sports Direct has since revealed that it had been contacted “by a number” of shareholders expressing support for Ashley’s appointment as Debenhams’ chief executive.
Last month, Debenhams said its secured fund of £200 million “would provide liquidity headroom” in new loans from existing lenders and “deliver stability for its customers, staff, suppliers and pension-holders”.
The refinancing provides the beleaguered retailer with facilities of £101 million and £99 million, and includes the £40 million to replace the interim borrowing it announced in February.
The department store said the first facility of £101 million will be drawn down immediately and it would now move to the next stage of its restructuring, which includes reducing rents and closing stores.
Debenhams has given Sports Direct and any other shareholder with a stake of more than 25 per cent until April 8 to either make a firm takeover offer which includes arrangements to refinance the group’s debt, or commit to either providing funding for the business or underwriting the issue of new shares.
If nothing is agreed by the deadline, Debenhams will only be able to access the remaining £99 million facility “upon transfer of those subsidiaries into the ownership of a lender-approved entity”.
This means Debenhams would hand over control to its lenders, effectively wiping out all shareholders – including Sports Direct’s near-30 per cent stake.
Ashley has sent 25 letters to Debenhams staff explaining the serious allegations of wrongdoing, in his last effort to rebel against the refinancing plans, The Mail on Sunday reports.
Last week, Sports Direct urged shareholders to send letters to Debenhams by including an email template.
FTI Consulting has been working with lenders to Debenhams, while KPMG has been advising the retailer itself.