The latest development in the ongoing saga between Sports Direct and Debenhams has seen the department store chain reject an offer from the Mike Ashley-owned company to underwrite a GBP150m (US$195.8m) rights issue for Debenhams as the retail tycoon fights to try to take control of the struggling retailer.
The offer, which was confirmed by Sports Direct in a statement this morning (8 April), is the latest in a series of moves that have already seen Ashley launch a coup attempt and most recently, Debenhams complete its GBP200m (US$263m) refinancing.
Ashley’s Sport Direct said it “continues to seek to constructively engage with the Debenhams board,” with the latest proposal forming part of a “comprehensive refinancing” of Debenhams. It is subject to a number of conditions, including the appointment of Ashley as Debenhams’ CEO, and Debenhams’ lenders agreeing to write-off (in aggregate) GBP148m of the ailing retailer’s debt.
Sports Direct added it continues to give “active consideration” to its pre-conditional possible offer for Debenhams at 5p in cash per ordinary share announced on 25 March and has until 5pm (GMT) on 22 April to announce a decision.
In addition, the Ashley-owned firm made it clear in today’s statement that the cash buyout and the equity swap are alternative transactions.
It is understood that if a refinancing deal is not struck today, Debenhams is likely to be placed into a pre-pack administration tomorrow, with hedge funds led by Silver Point taking full control.
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By GlobalDataHowever, in a statement this afternoon, Sports Direct said it has received a letter from Debenhams rejecting the proposal.
“Sports Direct is disappointed with Debenhams’ response. Sports Direct believes that, in the continued absence of any such engagement from the board of Debenhams and Debenhams’ lenders, there is a likely significant and negative impact on Debenhams’ current shareholders and other stakeholders, including suppliers and employees,” the retailer said. “Sports Direct, therefore, calls upon the board of Debenhams and its lenders to actively engage in negotiations.”
The Ashley-owned chain said it continues to actively evaluate all possible options to support Debenhams.
