Debenhams pays lip service to Ashley's €132m loan offer
DEBENHAMS will consider a £150m (€132m) loan offer from dissident shareholder Sports Direct, it said yesterday while indicating that Mike Ashley's latest push for control of the department store group is unlikely to succeed.
Mr Ashley's Sports Direct, Debenhams' biggest shareholder with a near-30pc stake, made its unsecured loan offer late on Wednesday with conditions that include appointing Mr Ashley as chief executive.
Debenhams, which has issued a string of profit warnings and lost 87pc of its market value over the past year, said the offer would require both the consent of existing lenders and bondholders as well as "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 said.
The loan would be interest-free if Debenhams agreed to give Sports Direct another 5pc of its equity without the normal obligation to make a full takeover bid. Without the equity, interest would be 3pc.
Debenhams rejected a £40m loan offer from Mike Ashley in December. His latest offer came as Debenhams works on a major restructuring that analysts expect to include a share issue and acceleration of its store closure plans.
On Monday it said it was in advanced talks with lenders for additional loans of £150m.
Shares in Debenhams were up 2.4pc at 3.27 pence in early trading yesterday, valuing the business at £38.5m. Its net debt at January 5 was £286m.