Sports Direct International PLC (LON:SPD) has urged Debenhams PLC (LON:DEB) to reconsider its £100mln offer to buy the department store chain’s Danish business as an alternative to a proposed emergency cash call.
Debenhams on Friday rejected Sports Direct’s takeover bid for its Dutch department store chain, Magasin du Nord, saying it believes the deal would not address its funding and restructuring requirements.
READ: Debenhams rejects Sports Direct's offer to buy Danish business in return for making Mike Ashley CEO
In a statement on Monday, Sports Direct said it does not consider House of Fraser – the department store chain it saved from administration last August – to be a competitor.
“In any event, were Mr Ashley to become CEO of Debenhams he would, as previously announced, step down from his roles at Sports Direct,” the company said.
“He would also be subject to fiduciary duties to Debenhams.
“Sports Direct would strongly recommend that the Debenhams board reconsiders the offers made by Sports Direct to date and their own duties as directors of Debenhams.”
It is not Ashley’s first attempt at making a grab for power at Debenhams.
Ashley, who owns almost 30% of Debenhams through Sports Direct, had last month 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 the retailer.
Debenhams has turned down a number of Ashley’s proposals to dig the company out of its massive debt pile, including an offer made earlier this month for an interest-free £150mln loan in return for an additional 5% stake.
On Monday Sports Direct said its representatives and advisors have been in talks with Debenhams' advisory group but it “cannot be said that the board of Debenhams has actively engaged in these discussions or are open to any form of an alternative proposal from any third party”.
“This lack of engagement and the related limited access to information has made it very difficult for Sports Direct to present a proposal that addresses Debenhams' funding and restructuring requirements beyond the immediate liquidity need,” it said.
“In any event, Sports Direct believes that as a result of the entry into of Debenhams' recent financing arrangements, the outcome of any negotiation with a party other than Debenhams' current lenders may not be within the board's control.”
Sports Direct added that Debenhams had not responded to its invitation to provide further details on the valuation of Magasin du Nord if it believed the business was worth more than the £100mln offered.
Debenhams announced on Friday that 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.