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Sports Direct announced on Monday that it was considering a public takeover bid on Debenhams, an ultimate attempt to prevent creditors from seizing control of the distressed chain of stores.
In a late stock market statement, Sports Direct said it plans to launch a fully cash offer on Debenhams and that it "would seek to manage Debenhams' business for the benefit of all Debenhams stakeholders and not for the benefit of existing debtors of Debenhams ".
Mike Ashley, founder and CEO of Sports Direct, has finally decided to take control of Debenhams from his creditors, who are in talks with the company's management about the terms of a complete financial restructuring. Last week, the company warned that the refinancing could result in the loss of any stock value in the company, including the current 29% stake in Sports Direct.
Debenhams shares closed at 1.55p on Monday; buying the rest of the bonus-free stock would cost only 13.5 million pounds. However, it is believed that if Mr. Ashley acquires control of the company, the holders of his senior unsecured notes worth £ 200 million would have the right to request a par redemption, thereby increasing the possible cost. The Notes are currently trading at half their face value, reflecting the Company's precarious financial position.
In his statement, Sports Direct said that there was no certainty that an offer would be made, nor the terms. Numis is warning the company, which has just been released from the obligation, under the takeover code, not to bid for Debenhams.
Debenhams declined to comment on Sports Direct's statement.
Mr. Ashley has already offered the company to lend him £ 150 million, on the condition that he becomes the managing director. He separately requested a special meeting to remove all but one of the directors of the company, although such a meeting is unlikely to be held until the terms of the refinancing are announced.
The Debenhams Board of Directors, led by interim President Terry Duddy, after incumbent President Ian Cheshire was removed from office at the company's annual meeting in January, rejected the offer and previous proposals. , believing that it did not serve the interests of all stakeholders.
This led to increasingly virulent criticism from Sports Direct executives, who said the company was fundamentally sound, but that it was systematically mismanaged and that it had not been there is no need to close dozens of stores, as foreseen in its restructuring plan.
Sports Direct had announced last week that it would repurchase North Store, the Danish department store subsidiary that Debenhams had attempted to sell last year, for £ 100 million in cash "to meet liquidity needs short term". Debenhams rejected this proposal, which was the third that Sports Direct had presented to the retailer in recent months.
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