Sports Direct urges Debenhams shareholders to revolt

Sports Direct has reacted to yesterday’s announcement from Debenhams that it must make a bid to buy the struggling department store by urging shareholders to revolt against refinancing plans.

The Shirebrook-based firm says it has been contacted by shareholders who want Mike Ashley installed as CEO at Debenhams.

In a statement, Sports Direct said: “Sports Direct has been contacted by a number of other shareholders in Debenhams plc regarding the protection of Debenhams shareholders’ interests and expressing their support for the appointment of Mr Mike Ashley as Debenhams CEO.”

Sports Direct provided a template letter with the statement for shareholders to submit expressing their concerns.

Last Friday (29 March) Debenhams went ahead with its £200m refinancing plan, but its lenders issued an ultimatum to Sports Direct to either make a firm bid for the struggling department store, or face it going under.

Debenhams said that half of the refinancing deal is conditional on Shirebrook-based Sports Direct pressing on with a “firm and binding offer” and make arrangements to refinance the department store’s crippling £560m debt or to finance a rights issue or provide finance.

It Sports Direct failed to do this, the cash would only be available to Debenhams if it was transferred to a “lender-approved” entity which would “result in no equity value for the shareholders”. Reports suggest this would mean Debenhams would be sold in a pre-pack deal to the current bondholders.