Sports Direct offers Debenhams alternative loan in return for more equity
Following Debenhams’ announcement that it is in advanced talks with its lenders regarding additional loans of around £150 million, Sports Direct has said it would be willing to make an alternative proposal and provide the department store with a £150 million interest free loan.
In a statement, Sports Direct said £40 million would be used to repay Debenhams’ bridge facility and the remaining £110 million would be made available for general working capital.
In return, Sports Direct would require an additional 5% stake in the department store which would take its shareholding to around 35%. If the 5% share issue was approved by Debenhams’ shareholders, the loan would be be interest free. Otherwise it would bear interest charges of 3%.
Sports Direct would also require that its chief executive Mike Ashley become a director and chief executive of Debenhams.
The news comes as reports emerge that Sports Direct has submitted a complaint to the FCA in which it has accused the Debenhams’ board of giving misleading advice to investors. Debenhams has rejected the complaint.
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