Sports Direct confirms £61.4m cash bid for Debenhams
Mike Ashley's Sports Direct has this morning confirmed a £61.4m cash bid for beleaguered department store Debenhams, but the bid comes with several conditions attached.
The 5p per share bid represents a 127% premium on the closing price of the department store's shares on 26 March and is pre-conditional upon Mike Ashley being installed as CEO of the business.
It has also said that the "Possible Offer" was pre-conditional upon the Debenhams group agreeing not to enter into any third party funding arrangements – the department store confirmed on 22 March it was seeking a £200m refinancing to secure its future.
Furthermore it has stipulated that Debenhams must not enter into any administration, a CVA or any other insolvency process. "Each of these pre-conditions must be satisfied or waived before any firm offer can be made," Sports Direct said.
As we all the £64.1m bid, Sports Direct has said it would "assist Debenhams in addressing its immediate funding requirements", subject to the above pre-conditions.
Ashley, who already owns a near 30% stake in Debenhams, has made several attempts to gain control at the firm, including an offer of a £150m interest-free loan and a bid for its Danish business Magasin du Nord, which have been rebuffed by Debenhams. Yesterday, after Ashley confirmed he was considering a cash bid, Debenhams said such a move would not solve its financial problems – however Ashley's offer of additional assistance in that matter make address this.
Of the latest offer Sports Direct said: "Sports Direct believes that the Possible Offer would offer fair and full value for Debenhams. It does not believe that Debenhams has the same value if it is (in effect) handed over to Debenhams' existing lender group. As such, Sports Direct would expect the Possible Offer to be attractive to Debenhams shareholders and other stakeholders as an alternative to Debenhams' current restructuring and refinancing process."