Sports Direct International PLC (LON:SPD) has used the launch of a new share buyback programme as an excuse to fire another broadside at Debenhams’ board, which opted to enter into administration this week rather than agree to a rescue plan which would have seen the retailer’s boss Mike Ashley take charge of the department store chain.
In a media statement made following this morning's announcement of an up to £15mln programme, the FTSE 250-listed group said it “believes our share buybacks are an important mechanism for maintaining an efficient but robust balance sheet for the benefit of our shareholders, whose support, including during the Debenhams refinancing process, we continue to appreciate.”
The retailer added: “Our understanding of the importance of our shareholders and our actions towards them are in complete contrast to the actions of the board of Debenhams, past and present, whereby they ignored the wishes of shareholders, both major and minor, and offers of support, and completely destroyed shareholder value.”
On Tuesday, Debenhams appointed FTI Consulting as its administrators, who immediately sold the stores group to a newly-incorporated company controlled by its lenders, including hedge funds understood to include Alcentra, Angelo Gordon and Silver Point Capital.
That meant Debenhams shareholders, including Sports Direct with a near 30% stake, saw all their investments wiped out – costing Ashley’s group £150mln.
Rescue plans rebuffed
Sports Direct had offered to underwrite a £150mln rights issue at the weekend, which Debenhams rejected on Monday. The sportswear retailer then raised that lifeline to £200mln on Tuesday morning on the condition that Debenhams' lenders write off £82mln of the retailer's £720mln debt pile.
Previously, Sports Direct had also said it was considering making a 5p per share cash bid for the Debenhams and had until April 22 to make a firm offer, but it terminated that interest following the group’s move into administration.
Debenhams had agreed a deal to secure £200mln in funding from lenders in March but only half was available at that point.
The rest of that money was due to be released depending on whether Sports Direct launched a firm takeover offer or agreed on the provision of at least £200mln in new funds via a loan or participation in a rights issue.
However, the lenders said the offer was "not sufficient to justify" extending the April 8 deadline to prevent a pre-pack administration from going ahead.
Ashley wanted to take charge
Sports Direct had made both offers on the condition that Ashley became chief executive of Debenhams.
In a statement following the termination of its bid interest, Sports Direct said that “it will not stop in its quest to get to the bottom of this appallingly managed process and to find and hold to account those responsible for this final turn of events. This is a tragedy. There is no other way of putting it, especially when a long-term solution was there for the taking.”
Ashley himself commented: "As normal, politicians and regulators fiddled whilst Rome burnt. These politicians and regulators have proven to be as effective as a chocolate teapot. I restate my call for the advisors to go to prison given their skulduggery in undermining shareholders and other stakeholders, such as employees and pensioners.”