DEBENHAMS, the department store chain, says it will consider “carefully” an offer of a £150 million loan from Mike Ashley conditional on the businessman becoming its chief executive.

Its response followed Sports Direct’s confirmation that it had made an offer of a loan to Debenhams as part of an arrangement which would install Mr Ashley as its chief.

This came as Sports Direct also revealed that it had made a complaint to the City watchdog over communications from Debenhams.

In a letter written just days before Mr Ashley launched an attempted coup to install himself on the Debenhams board, Sports Direct took issue with the retailer’s results statements.

Debenhams branded the complaints “unfounded and self-serving”.

But in the latest twist of the ongoing saga, Debenhams confirmed it would look at the proposed loan from Sports Direct.

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It said in a statement: “Debenhams acknowledges Sports Direct’s statement ... and confirms receipt of its proposal to provide a £150m, unsecured 12-month term loan to the company, subject to certain conditions.”

The department store chain said any such loan would require the backing of current lenders and “material amendments” to
existing facilities.

It added: “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.”

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Under the terms of the loan offer, Debenhams’ shareholders would vote on whether to issue new shares to Sports Direct, taking its holding to 35 per cent.

If this was approved, the loan would be interest-free, but without the share issue it would bear 3% interest.

The loan would see Debenhams use £40m to pay down existing debt and the remaining £110m available for working capital.

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The retailer, which has 14 stores in Scotland, is battling a £500m-plus debt mountain which it has also been trying to
refinance, with a debt-for-equity swap or rights issue reportedly considered.

It is the latest move in Mr Ashley’s high street shopping spree. Last year he bought House of Fraser and Evans Cycles, and has previously been linked to bids for Patisserie Valerie and HMV. Debenhams has previously rebuffed funding offers from his firm.

Independent retail analyst Nick Bubb was quoted as saying of Debenhams’ move: “Tactically, that might well be the right way to respond, but Debenhams would have to be desperate to take the plan seriously.”


Sports Direct’s letter shared with media on Wednesday, which was dated March 4 – the day before Debenhams issued a profit
warning to the market – took issue with a trading statement in January.

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In the trading statement in question, Debenhams noted it was “currently on track” to meet market expectations.

Eight weeks later, the retailer warned that its profits would be lower after a hit to sales in the 18 weeks to January 5.

Sports Direct, which is the largest shareholder in Debenhams, was sent a copy of the profit warning the night before it was made public. The letter was also shared with the Financial Conduct Authority in a move Sports Direct described as putting its concerns on record.

Mr Ashley tabled a proposal last Thursday for a shareholder meeting to remove “all of the current members of the Debenhams board”, other than finance chief Rachel Osborne.

Part of the department store chain’s plans have included the closure of 50 stores.