Sports Direct increases revolving credit facility
As a result, the sporting goods retailer said it has increased its revolving credit facility to a capacity of £788 million following what it described as “unjustified criticism” over related party transactions, including “incorrect press coverage” of the benefits of the Mike Ashley/Mash Holdings facility.
In a statement, Sports Direct said: "It has been decided that it is in the best interests of the group and its shareholders to avoid further criticism at this time. Accordingly, the group will not draw down from the MALF in the foreseeable future, which will lead to an increase in the overall cost of borrowing.”
Since May 2014, Sports Direct has financed its capital requirements through a revolving credit facility with a number of banks. Under the terms of the facility, the interest rate payable by the group increases if it is more than one third drawn (i.e. more than £263 million).
Previously, when the group has required borrowing in excess of this amount, it has utilised its £250 million loan facility with Mike Ashley/Mash Holdings.
Sports Direct said: “The rate of interest payable on this facility is c.50% lower than that payable on the RCF, and does not attract arrangement fees or commitment fees. Accordingly, although an unusual arrangement for a public company, using this facility in this way has been of significant benefit to the group, over time giving rise to a saving of over £1 million.”
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