Sports Direct makes £150m loan offer to Debenhams
Shirebrook-based Sports Direct has offered a £150m loan to struggling retailer Debenhams.
The news follows a hostile takeover bid from Mike Ashley, in which he said he would step down from Sports Direct if he could become the boss of the department store.
Earlier this week, Debenhams announced that it is in negotiations with its current lenders to try and secure funding of approximately £150m, £40m of which would be used to refinance the new secured £40m bridge facility.
In a statement, Sports Direct said: “Sports Direct wishes to confirm that it has made an alternative proposal to Debenhams.
“Sports Direct would make a £150m unsecured term loan (of 12 months) to Debenhams. Of the total amount of the lending, £40m would be used to repay Debenhams’ £40m bridge facility with an attendant release of security. The remaining £110m would be available for general working capital.
“Debenhams would agree to put a proposal to its independent shareholders to approve the issue of circa 5% new shares at the prevailing market price to Sports Direct (so as to increase Sports Direct’s shareholding to circa 35%). If the 5% share issue and related “whitewash” was approved by Debenhams’ independent shareholders, the £150m loan would be guaranteed to be interest-free. If such approvals were not forthcoming, the loan would bear interest at 3%.”
“Mike Ashley would become a director and the CEO of Debenhams.”
In response, Debenhams said: “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.
“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.”