Debenhams "gives careful consideration" to Sports Direct offer

By

Sandra Halliday

Published
Mar 14, 2019

As the battle over who controls Debenhams (its current board, its lenders or major shareholder Mike Ashley via Sports Direct) intensifies, Debenhams has issued a reply to Ashley’s latest offer.

On Wednesday, Sports Direct had offered the retailer a £150m interest-free loan on condition that it could have an extra 5% equity stake in the firm. That would have pushed it well over the 30% threshold at which it should make a full bid for Debenhams, but a special agreement could be used to avoid that having to happen.

Debenhams has clearly shown in the past that it doesn’t want to hand Ashley and more say over its future than he has at present and while its reply to his offer was understated and in no way a rejection, it certainly didn’t offer any hint that the board has moved any closer to welcoming Ashley’s involvement.

“Debenhams acknowledges Sports Direct's statement issued at 6.30pm last night and confirms receipt of its proposal to provide a £150m, unsecured 12 month term loan to the company, subject to certain conditions,” it said.

“Any third party loan offer on these terms would require both the consent of our RCF Lenders and Noteholders and material amendments to existing facilities. Nevertheless, the board will "give careful consideration to the proposal and will engage with Sports Direct and other stakeholders regarding its feasibility in the interests of all parties.”

It’s obvious that Ashley isn’t going to give up his goal of taking a more active role in Debenhams’ turnaround process but that the retailer’s executive team isn’t going to welcome him with open arms. In the end though, as today’s statement makes clear, the firm’s other shareholders and its lenders are the ones who will be in the driving seat around what eventually happens, rather than Debenhams’ beleaguered chairman and CEO.