Debenhams snubs £150m Sports Direct deal

Debenhams has rejected an offer from Shirebrook-based Sports Direct to underwrite a £150m rights issue.

The offer from Sports Direct came over the weekend, with Sports Direct owner Mike Ashley 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 came with the condition that Ashley would be installed as the new Debenhams chief executive.

In a statement, Sports Direct said: “Sports Direct announces that it has today received a letter from Debenhams rejecting the proposal made by Sports Direct to underwrite a £150 million equity issuance by Debenhams.

“Sports Direct had sought to constructively engage with the Debenhams board, including over the weekend, in order to put together a proposal for a solvent solution for Debenhams in the form of a £150 million pre-emptive equity issuance to existing Debenhams shareholders. Sports Direct believes that the Equity Issuance, which would have formed part of a comprehensive refinancing of Debenhams, should have been deliverable with the co-operation of Debenhams and its existing lenders.

“As such, 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. Sports Direct therefore calls upon the board of Debenhams and its lenders to actively engage in negotiations.”