Mike Ashley’s £150m rescue offer for ailing department store chain Debenham’s has been knocked back.
The Newcastle United owner’s retail empire Sports Direct has announced it has received a letter from Debenhams plc, rejecting its proposal to underwrite a £150m equity issuance by Debenhams.
Despite the knock back, the firm said it is still mulling making an offer for the firm, and called for the chain and its lenders to negotiate.
Shares in Debenhams were down more than 13% in afternoon trading.
In a statement, the firm said : “Sports Direct had sought to constructively engage with the Debenhams board, including over the weekend, in order to put together a proposal for a solvent solution for Debenhams in the form of a £150m pre-emptive equity issuance to existing Debenhams shareholders.
“Sports Direct believes that the Equity Issuance, which would have formed part of a comprehensive refinancing of Debenhams, should have been deliverable with the co-operation of Debenhams and its existing lenders.
“As such, Sports Direct is disappointed with Debenhams’ response.
“Sports Direct believes that, in the continued absence of any such engagement from the board of Debenhams and Debenhams’ lenders, there is a likely significant and negative impact on Debenhams’ current shareholders and other stakeholders, including suppliers and employees.
“Sports Direct therefore calls upon the board of Debenhams and its lenders to actively engage in negotiations.”
Mike Ashley accuses Debenhams bosses of 'falsehoods and denials' after making £150m rescue bid
Sports Direct has until 5pm on April 22 to announce either a firm intention to make an offer for Debenhams or that it does not intend to make an offer.
Yesterday the retail tycoon ripped into Debenhams executives, accusing the board of “falsehoods and denials”.
The maverick billionaire called for the board of the struggling high street chain to be investigated, two members to undergo lie detector tests, and trading in its shares to be suspended.
As well as accusing Debenhams bosses of “a sustained programme of falsehoods and denials”, the sportswear chain founder added that in a meeting “misrepresentations were made to induce Sports Direct into signing a non-disclosure agreement, locking them out of any ability to trade in the bonds or equity of Debenhams for a period of time”.
In an extraordinary outburst, Mr Ashley claimed that he and two colleagues subsequently took lie detector tests, with the results showing “without any doubt” that they were telling the truth in their recollection of the meeting.
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Sports Direct has now called for Debenhams interim chairman Terry Duddy and non-executive director David Adams to take their own lie detector tests to “clarify their recollection of this meeting”.
Mr Ashley has a near-30% stake in the department store but faces wipeout if the department store presses ahead with a £200m refinancing plan announced in March.
Under the proposal, £101m is to be drawn down immediately, in order to allow restructuring, which will include store closures and rent reductions.
The other £99m would have been made available if Sports Direct - or any other shareholder with a stake of more than 25% - fulfilled one of two conditions by April 8.
