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Mike Ashley offers to bail out Debenhams if he can increase his stake and become CEO

Lauretta Roberts
13 March 2019

Mike Ashley's Sports Direct has offered a £150m interest free loan to bail-out Debenhams if the department store allows it to increase its stake to 35% and install Ashley as CEO, as previously requested.

In a statement issued to the Stock Market after close of business this evening, Sports Direct said that in light of Debenhams being in advanced talks to secure £150m of funding existing lenders, it was willing to match that sum on an interest-free basis if Sports Direct would be permitted to extend its near 30% stake to 35% without being obliged to make a bid for the rest of the company (under Stock Market rules anyone owning over 30% in a plc must make an offer for the full business unless shareholders agree otherwise in a so-called "whitewash").

Should Sports Direct not be able to increase its shareholding the loan would still be offered but would bear interest at a rate of 3%. Of the total amount of the lending, £40m would be used to repay Debenhams' £40m bridge facility with an attendant release of security. The remaining £110m would be available for general working capital.

Another stipulation of the offer would be that Ashley would be installed as a director and CEO. He had previously demanded that the Debenhams board be wiped clean except for CFO Rachel Osborne and that he would step down as CEO from Sports Direct to focus Debenhams were he to be installed.

The move came just hours after a previous story broke revealing that Ashley had reported Debenhams to City watchdog the FCA claiming its communications with shareholders were "misleading". In a letter to the FCA Ashley picked up on the fact that in a January update the company had said it was “on track to deliver current-year profits in line with market expectations” only to issue a profits warning eight weeks later.

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