Mike Ashley’s Sports Direct has offered a £150m loan to Debenhams after it was revealed that the retailer is in negotiations with lenders.
A statement from Sports Direct says: “Sports Direct refers to the announcement of Debenhams plc (Debenhams) to the effect that Debenhams is in negotiations with its current lenders as regards entering into additional facilities of approximately £150m, £40m of which would be used to refinance the new secured £40m bridge facility announced by Debenhams on 12 February 2019.
“Sports Direct wishes to confirm that it has made an alternative proposal to Debenhams.
“Under Sports Direct’s proposal, on or before 31 March 2019: 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.”
Debenhams responded to the offer in a statement, saying: “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.”