Debenhams PLC (LON:DEB) is to press ahead with its controversial plans to secure a £200mln lifeline from lenders despite Mike Ashley confirming he is weighing up a cash offer for the troubled department store chain.
In an after-hours stock exchange announcement confirming his interest in a takeover, the billionaire said any offer would be “compelling” for existing investors as it would give them the chance to cash in their stakes.
“In Sports Direct's opinion, Debenhams’ restructuring and refinancing process is likely to result in an adverse outcome for Debenhams’ existing shareholders and, accordingly, Sports Direct confirms that, alongside other options, it is considering a possible offer for the entire issued and to be issued share capital of Debenhams not already held by Sports Direct.”
Debenhams bosses said on Tuesday morning that any proposal would be “given due consideration” but added that a takeover offer wouldn’t address the company’s immediate funding requirement.
“Therefore, the company will continue with its plan to obtain the funding required, as outlined in Debenhams' statement of 22 March 2019.”
News of Ashley's interest pushed Debenhams shares up by a third to 2.13p come Tuesday afternoon.
Not his first grab for power
Ashley, who stands to lose millions of pounds should his Debenhams stake be diluted out of sight, has tried several ways to wrestle control of the retailer.
Last week he made a £100mln bid for the company’s Danish business, Magasin du Nord, but Debenhams bosses rejected the offer, a condition of which was that Ashley was put in charge of the group.
He has also recently called for a shareholder meeting at which he would ask investors to back his proposal to sack the entire Debenhams board – apart from chief financial officer Rachel Osborne – and appoint him to an executive role.
The 54-year-old was instrumental in getting chairman Ian Cheshire and chief executive Sergio Bucher kicked off the board back in January.
Shortly before then, it had emerged that Debenhams, which has been one of the worst hit by the UK high street malaise, had turned down a £40mln loan offer from the Newcastle United owner.
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