Debenhams PLC (LON:DEB) has rejected a £100mln cash offer from Sports Direct International PLC (LON:SPD) to buy the department store chain's Dutch business in exchange for putting Mike Ashley in charge.
The struggling retailer said it believes Sport Direct's approach to buy its Danish department store chain, Magasin du Nord, would not address its funding and restructuring requirement while balancing the interests of all stakeholders.
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"As such, Magasin is an important part of any lending proposition and therefore any broader solution that protects value for the group."
Last month, he called for a general meeting to ask shareholders to back his plan to remove the current board and appoint him to an “executive role” at Debenhams.
Debenhams says Sports Direct has ignored guidance on workable solutions
In his latest grab for power, Sports Direct had proposed buying Magasin Du Nord and giving Debenhams the option to buy back the business after 12 months at the same price it was sold for.
Sports Direct also invited Debenhams to provide "further details of its valuation" if it believes the business is worth more than the offer price.
On its suggestion of putting Ashley in charge, it said: "Sport Direct believes its proposal would provide additional management and first class leadership to Debenhams through this challenging period of restructuring, together with additional funding."
READ: Mike Ashley forced to requisition another meeting of Debenhams shareholders after initial cock-up
In response, Debenhams said it has remained open to engagement with Sports Direct throughout its refinancing process but the sportswear retailer had "repeatedly ignored" its guidance on what would represent "workable solutions".
Debenhams said it has continued to make progress with its refinancing discussions with existing lenders and stakeholders while it remains "open to constructive involvement from Sports Direct".
Debenhams seeking £200mln from lenders
Earlier on Friday, the compay announced it was seeking £200mln of funding from lenders, higher than the £150mln it said it had been looking to raise.
Lenders have until Thursday next week to approve the cash injection.
The debt restructuring is likely to wipe out shareholders, such as Sports Direct, and hand control of the business to lenders.
"If it proceeds on this course there would no equity value left for existing shareholders. Management is taking pretty drastic action here," said Neil Wilson, chief market analyst at Markets.com.
As of January 5, Debenhams had net debt of £286mln and a committed debt facility of £520mln that expires next year.