Ashley offers struggling retailer £150m lifeline

The saga surrounding Mike Ashley and Debenhams has taken another twist after the Sports Direct tycoon wrote to the struggling department store offering to underwrite a £150m rights issue to save it from being sold out of administration.

Ashley is desperate to preserve the value of his near-30% share in Debenhams, which would be wiped out if it was sold in a pre-pack deal.

However, the £150m lifeline comes with the condition that Ashley will be installed as the new Debenhams chief executive. He also wants Debenhams shareholders to agree to a debt-for-equity swap that would bring the department store’s debt mountain down to approximately £300m.

Meanwhile, Sky News reports that Debenhams has responded to the offer by Sports Direct, telling to end his attempted takeover, and comply with the following four conditions, saying that Ashley should:

– withdraw his request for an extraordinary general meeting aimed at ousting every board member apart from its finance director
:: enter into a stabilisation agreement which would require him to refrain from public statements that could damage the company
:: agree a press release with Debenhams and its lenders that would be issued jointly on Monday
:: provide a legal guarantee that the £150m he is pledging would be provided if Debenhams agrees to his request to become its chief executive.

Ashley has until today to come up with an offer for Debenhams, or it is likely to be placed into administration tomorrow (9 April).

The news comes after the Debenhams board snubbed a £61m takeover approach from Ashley in March and ploughed ahead with a £150m refinancing deal.