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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… View Article

DEPARTMENT STORES

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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