UK department store group Debenhams is pushing ahead with plans for a £200m rescue deal with its lenders as it said a potential bid from Sports Direct would come too late to provide the funds needed to keep the department store afloat.
In a statement to the stock market, it said it would give “due consideration” to any firm offer from Sports Direct, which announced yesterday that it was cosndiering a possible cash bid.
Debenhams said any proposal from Sports Direct must indicate a price, a clear plan for repayment of Debenhams’ £560m debts, all of which would fall due on a change of control, and a plan to address the business’s immediate funding requirements.
Sports Direct, which already owns nearly 30% of Debenhams, has until 22 April to file a firm bid for the department store group. Sports Direct boss Mike Ashley is understood to have held discussions with lenders about refinancing Debenhams’ debts but the retailer’s board is sceptical that he is serious about making an offer.
“There is no certainty that any offer will ultimately be forthcoming,” the company’s board said today.
The potential bid is the latest in a flurry of tactics Ashley has tried to wrest control of Debenhams and prevent Sports Direct’s stake from being wiped out under a planned rescue refinancing.Sports Direct has previously offered Debenhams a loan of £150m, or to buy the Danish chain Magasin du Nord for at least £100m as alternatives to the department stores group having to raise money from existing lenders. Ashley has also called a shareholder meeting at which he wants to remove the directors and install himself as chief executive.
RPA
Perspective
Debenhams has constantly
slammed the door shut on Sports Direct tycoon Mike Ashley’s
attempts to help it through its difficulties.
He has offered loans – £40m at the end of last year and £150m just this month – yet Debenhams has consistently claimed that the terms might not be in the interests of other stakeholders.
Given Debenhams’ difficulties, and the fact that the retailer has said restructuring options that may be followed “would result in no equity value for the company’s current shareholders”, mean that it is hardly surprising that many investors might like to take Ashley’s money.
There may be plenty to criticise about how Debenhams has performed in recent years but Ashley’s solutions to putting the business back on track may serve his own interests but whether they will really serve the interests of anyone else – shoppers, staff, landlords, suppliers or loss-making shareholders – must be questionable.
Debenhams needs to set a clear, convincing direction itself, although a CVA must still be on the cards and landlords are once again braced.
In the meantime, a CVA for stationary specialist Paperchase has been approved and bookmaker William Hill has pushed to achieve 50% rent reductions across parts of its portfolio, as times continue to get tougher on the UK high street.
