logo-loader
viewDebenhams PLC

Sports Direct admits it would seek to acquire Debenhams if it fell into administration - media report

Last week, Sports Direct offered to lend Debenhams £150mln interest-free and with no security if the department store chain agreed to appoint Mike Ashley as chief executive

Debenhams store
Debenhams’ management is currently trying to refinance its borrowings and push ahead with a company voluntary arrangement

Sports Direct International PLC (LON:SPD) has admitted that it would seek to acquire Debenhams PLC (LON:DEB) if the department store chain fell into administration, according to a media report.

The Financial Times said on Monday that Chris Wootton, who has been lined up to replace billionaire Mike Ashley as chief executive of Sports Direct should the founder step aside to run Debenhams, told the newspaper that while the administration was “not the outcome we want”, it was a distinct possibility.

READ: Debenhams to give ‘careful consideration’ to Mike Ashley’s latest loan offer

Sports Direct, which last year bought House of Fraser after it fell into administration, is the biggest shareholder in the troubled department store group, with a 29% stake.

Debenhams’ management is currently trying to refinance its borrowings and push ahead with a company voluntary arrangement (CVA) to close 50-60 stores after a string of profit warnings.

Last week, Sports Direct put forward its own refinancing proposal, offering to lend Debenhams £150mln interest-free and with no security if the department store chain agreed to appoint Ashley as chief executive.

"Pre-pack" administration

Holders of Debenhams’ £200mln unsecured bonds are also thought to be considering a “pre-pack” administration of the department stores group that would hand control to lenders without requiring shareholders’ assent, the Financial Times said.

Wootton, who is currently Sports Direct’s deputy chief financial officer told the newspaper: “We’ve put £150m into the (Debenhams) equity, now it’s a penny stock.”

He added: “We’d rather have the share price go back to where it was. It can be pulled back from the brink if immediate action is taken.” 

Sports Direct has already written down £85mln of its investment as Debenhams’ share price has plunged.

In mid-morning trading on Monday, Debenhams shares were 1.7% lower at 3.23p, while Sports Direct shares were flat at 288p. 

Quick facts: Debenhams PLC

Price: - -

LSE:DEB
Market: LSE
Market Cap: -
Follow

Add related topics to MyProactive

Create your account: sign up and get ahead on news and events

NO INVESTMENT ADVICE

The Company is a publisher. You understand and agree that no content published on the Site constitutes a recommendation that any particular security, portfolio of securities, transaction, or investment strategy is...

FOR OUR FULL DISCLAIMER CLICK HERE

Watch

Sareum Holdings raises over a £1mln to advance preclinical work on its...

Sareum Holdings PLC's (LON:SAR) Tim Mitchell caught up with Proactive London's Andrew Scott following the news it's raised just over £1mln to advance the preclinincal work on its TYK2/JAK1 drugs SDC-1801 and SDC-1802. Mitchell says they're exploring the potential benefit of the TYK2/JAK1...

10 minutes ago

2 min read