Ashley's share issue plan rejected by Debenhams

Debenhams rejected Mike Ashley's latest offer to rescue the troubled retailer just hours after revealing it.

Billionaire Sports Direct International said Debenhams had rejected the proposal to issue new shares for an amount of 150 million pounds (174 million euros), the deadline for negotiations with creditors being imminent.

Mr. Ashley previously stated that he had proposed to subscribe to the shareholder rights issue to prevent him from losing much of his equity investment at the retailer.

Even after Debenhams rejected the plan, Ashley said a cash offer valuing the chain of stores at £ 61m (€ 70m) remained an option.

He called on the company and its lenders to "actively engage in negotiations".

Ashley is grappling with Debenhams lenders, including US banks and hedge funds, while the company is seeking to restructure a debt of around 720 million pounds (834 million euros). .

The troubled British retailer is preparing a so-called pre-packaged administration under which shareholders, including Sports Direct with a stake of about 30%, would likely lose their investments.

The prepackaging administration is usually a judicial process that can allow creditors to take control of a pre-established plan while the company continues to operate normally. It does not require shareholder approval.

Ashley's latest offer came after Sports Direct accused Debenhams of a "sustained program of lies and denials." In a late statement on Sunday, he called on the board members of the department store company to take tests at the lie detector.

Mr Ashley, CEO of Sports Direct, said that his support for the rights issue would have been subordinated to his appointment as CEO of Debenhams, a request that was previously a stumbling block in the negotiations.

Debenhams shares, which have fallen more than 90% in the last 12 months, lost 14% on Monday afternoon, after quick wins.

Ashley's latest proposal would have been subject to Debenhams' creditors agreeing to waive a debt of £ 148 million (€ 171 million).

According to a Sports Direct letter to Debenhams, lenders also exchanged an additional 122 million euros of debt (141 million euros) for shares.

The company had previously rejected Mr. Ashley's offer for a 150 million pound (€ 174 million) interest-free loan, preferring a new financial package from creditors. Debenhams' lenders have also repeatedly rebuffed Ashley's attempts to be named managing director.

Bloomberg

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