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Sports Direct's Mike Ashley accelerates calls to become Debenhams boss after receiving ultimatum

Debenhams has warned it could be taken over by lenders, which would wipe out shareholders unless Sports Direct takes it over or provides the funding needed to continue trading
Sports Direct owns nearly 30% of Debenhams

Sports Direct International plc’s (LON:SPD) Mike Ashley has urged fellow shareholders of Debenhams PLC (LON:DEB) to back his demand to become chief executive of the troubled department store chain after he received a put-up or shut-up ultimatum.

Sports Direct, which owns nearly 30% of Debenhams, said on Monday that a number of other shareholders had been in contact regarding the protection of their holdings and expressed support for the appointment of Ashley as chief executive.

READ: Debenhams completes £200mln refinancing but remains open to takeover bid from Mike Ashley's Sport Direct

The announcement comes after Debenhams said it had secured £200mln of new funding through lenders but only £101mln would be available immediately.

The remaining £99mln would be released depending on whether Sports Direct launched a firm takeover offer for Debenhams, including refinancing all its debts and providing new working capital or agreed on the provision of at least £200mln in new funds via a loan or participation in a rights issue.

Ashley, the founder and chief executive of Sports Direct, would also have to let go of his bid for a general meeting to oust most of the board and appoint himself as boss.

If Sports Direct turned down these proposals, Debenhams would be taken over by lenders, wiping out shareholders.

Sports Direct tells Debenhams shareholders what to say 

In response, Sports Direct said it has made a template letter for shareholders to send to Debenhams, voicing their support for the sportswear retailer’s demands.

The letter states: “As a concerned shareholder in Debenhams PLC, I have watched with increasing concern the board continue to ignore the interests of its shareholders as it has sought new banking facilities from its existing lenders and noteholders. 

“In particular, I was gravely concerned by your statement on 22 March 2019 where you acknowledged that under your current course of action, there was an increasing possibility that the entire equity value for the company’s current shareholders would be wiped out.

“I am therefore writing to demand that the Debenhams board takes immediate steps to install Mike Ashley as CEO, as clearly there is no time to wait for a general meeting to be called in order for this to be effected by shareholders.”

Sports Direct had been weighing up a £61.4mln bid to buy Debenhams but a firm offer was contingent on the retailer terminating its plans for a £200mln refinancing and installing Ashley as boss.

Debenhams ignored the request, saying any offer from Sports Direct would not address its immediate funding needs.

Instead, the company pushed ahead with a refinancing after a majority of holders of its 5.25% senior notes due 2021 had agreed to change the terms of their bonds

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