“If such approvals were not forthcoming, the loan would bear interest at 3%.”
Sports Direct said £40mln of the unsecured loan would be used to repay the bridge facility that Debenhams agreed with its lenders last month. The remaining £110mln would be available for general working capital.
Debenhams bosses to consider offer
Debenhams confirmed early on Thursday morning that it had received Ashley’s offer and that it was under consideration.
“Any third-party loan offer on these terms would require both the consent of our revolving credit facility lenders and noteholders and material amendments to existing facilities.
“Nevertheless, the board will give careful consideration to the proposal and will engage with Sports Direct and other stakeholders regarding its feasibility in the interests of all parties.”
The retailer, which has issued a string of profit warnings over the past 18 months, is currently working on a refinancing that many in the City expect will comprise a debt-for-equity swap, a new share issue and possibly a company voluntary arrangement (CVA) to reduce its onerous lease obligations.
Ashley, understandably, is keen to avoid such a debt-for-equity swap and share issue as it would dilute his shareholding.
Sports Direct said it envisaged that its proposal would be concluded one way or another by the end of this month.