Debenhams Rejects Ashley's Offers to Fund Rescue in Return for CEO Job

Andrew Cummings
April 10, 2019

In a statement late on Sunday, it called for board members of the department store company to take lie-detector tests.

"Mr Ashley's appointment would immediately relieve any pressure on the company's supply chain and he would be in a position to lead the restructuring of the company's stores and operations", BBC quoted Sports Direct as telling Debenhams in a letter.

Sports Direct said it was also considering its options after it made a 61 million pound offer for Debenhams at the end of March.

When it set the deadline, Debenhams' board stipulated that Sports Direct must either launch a fully-funded bid, with facility to provide working capital and pay off its existing debts, or agree to underwrite a rights issue on terms agreeable to its lenders.

Sports Direct boss Mike Ashley is still looking for ways to take control of Debenhams, he said on Monday after the ailing retailer rejected his rescue plan only hours before it was due to fall into the hands of its lenders.

"Notwithstanding Debenhams' rejection of Sports Direct's proposal in relation to the Equity Issuance, Sports Direct continues to actively evaluate all possible options to support Debenhams".

The company has previously snubbed an offer from Mr Ashley for a £150m (€174m) interest-free loan, preferring a new financing package from creditors.

The other half would be released depending on whether Sports Direct launched a firm takeover offer or agreed on the provision of at least £200mln in new funds via a loan or participation in a rights issue.

Good morning: Has time run out for embattled shareholders in Debenhams? The results "showed without any doubt" that they were providing an accurate report of the meeting, Sports Direct said.

"Sports Direct would welcome Terry Duddy and David Adams taking their own lie detector tests to clarify their recollection of this meeting".

The person said Debehams board was anxious Ashely would back out of the £150mln lifeline if he gained full control of the company.

However, a source familiar with the situation said that there is a lack of trust between the two sides, with Debenhams fearing that Ashley could renege on his investment offer after he takes control.

He added: "It looks like Ashley faces the unpleasant choice of backing down on demands such as being made chief executive of the group and ousting the current board or letting the lenders take charge and being wiped out entirely".

In afternoon trading, shares in Debenhams fell 7.8% to 1.88p.

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