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Letter created for Debenhams shareholders to "demand" Mike Ashley be made boss

Press Association
30 March 2019

Sports Direct has created a letter for Debenhams shareholders to sign which includes a “demand” that Mike Ashley is made chief executive of the department store group.

The sports chain said it has been contacted by shareholders who have expressed their support for the appointment of the billionaire Sports Direct owner as chief executive.

Debenhams could go into administration within days as part of a major restructuring plan that will see it fall into the hands of its lenders and wipe out Mr Ashley’s shareholding in the troubled chain.

Sports Direct said it made a template letter available on Sports Direct’s website “should any shareholder in Debenhams want to use it to make their views known directly to Debenhams”.

The letter says: “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.”

It concludes: “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.”

Debenhams has given Mr Ashley just over a week to put his money where his mouth is, by either making a firm takeover offer or providing an alternative funding package.

On Friday, Debenhams confirmed it has put in place a £200m refinancing plan, of which £101m will be drawn down immediately.

The retailer said this would allow it to begin a restructuring process involving store closures and rent reductions.

The other £99million will only be made available if Sports Direct, or any other shareholder with a stake of more than 25%, fulfils one of two conditions by 8 April.

Under one option, Ashley can make a takeover offer which includes arrangements to refinance the group’s debt.

Alternatively, he can call off the emergency meeting he has requested to install himself on the retailer’s board and commit to either providing funding for the business or underwriting the issue of new shares.

If neither course of action is taken by the deadline, the company will go into a pre-pack administration, handing control to its lenders and wiping out shareholders, including Ashley’s near 30% stake.

This would then allow for the transfer of the £99m to the company under its new ownership. Debenhams added that it would be contacting Ashley to gauge his interest.

Earlier on Friday, Ashley lashed out at advisers to Debenhams after his takeover approach was snubbed.

FTI Consulting has been working with lenders to Debenhams, while Lazard and KPMG have been advising the retailer itself.

Only on Wednesday, Ashley, through Sports Direct, said he was considering tabling an offer for Debenhams which would value it at £61.4m.

But Debenhams has consistently resisted overtures from the tycoon.

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