Debenhams is reportedly on the verge of securing a £200 million cash injection as a way to save the business and stave off a takeover campaign led by Mike Ashley and Sports Direct.
According to Sky News, the embattled department store retailer is on the brink of securing the bigger-than-anticipated borrowing facilities and could make a statement to the stock exchange later today or early next week. Earlier this month, Debenhams said it was in advanced stages of securing a £150 million refinancing deal from lenders ahead of a rent deadline that falls next week.
However, insiders speaking to Sky News said the figure had grown to £200 million. Without the fresh capital, there is speculation that the 206-year-old department store business could fall into administration.
Sports Direct had also offered an unsecured loan of £150 million to Debenhams which was subject to conditions, such as installing Ashley as Debenhams’ new chief executive, and increasing its stake in the department store to 35 per cent. According to Sky News, Debenhams lenders have ruled out accepting Sports Direct’s offer after Debenhams said it would consider accepting it.
The news comes a day after Mike Ashley requisitioned a meeting of Debenhams shareholders as part of a renewed attempt to give the boardroom a clean sweep and install himself on it. Ashley issued a statement to the market with the formal request after his first attempt on March 7 was foiled by a technicality, because Sports Direct’s shares in Debenhams are held by a third-party nominee.
Ashley – who has a stake of 29.7 per cent in the department store retailer through his Sports Direct retail empire – has ambitions to install himself on the board and remove all other members except finance boss Rachel Osborne. As part of his proposal, he would step down from his position as Sports Direct chief executive, to be replaced by deputy finance boss Chris Wootton in an acting capacity.
Earlier this year, Ashley successfully led a coup to oust Debenhams chairman Sir Ian Cheshire from the boardroom earlier this year. Cheshire subsequently resigned. The same coup also saw Sergio Bucher ousted from the boardroom, but he was permitted to continue carrying out his duties as Debenhams chief executive.
In addition, last week Sports Direct revealed it had flagged Debenhams to the Financial Conduct Authority and publicly accused it of misleading the market on its communication of the health of its finances. The department store has since denied it had misled the market.
