Debenhams Plc rejected Mike Ashley’s latest offer to rescue the troubled retailer only hours after he disclosed it.
The billionaire’s Sports Direct International Plc said Debenhams turned down a proposal to issue £150 million pounds in new shares, as a deadline for talks with creditors looms. Ashley said earlier Monday he had offered to underwrite the shareholder rights issue in a move to prevent him from losing much of his equity investment in the retailer.
Even after Debenhams rejected the plan, Ashley said a cash offer valuing the store chain at £61 million remained an option. He called on the company and its lenders to “actively engage in negotiations.”
Ashley is locked in a battle with Debenhams lenders, including banks and US hedge funds, as the company seeks to restructure about £720 million of debt. The struggling UK retailer is preparing a so-called pre-packaged administration under which shareholders – including Sports Direct with a roughly 30% stake – would likely lose their investments. The deadline for those talks is Monday evening.
Ashley’s latest offer came after Sports Direct accused Debenhams of “a sustained program of falsehoods and denials.” In a statement late Sunday, it called for board members of the department-store company to take lie-detector tests.
The chief executive officer of Sports Direct said his support for the rights issue would have been conditional on him being named CEO of the department-store chain, a request that was previously a sticking point in negotiations.
Debenhams declined to comment on Ashley’s offer. Its shares, which have fallen more than 90% over the past 12 months, were down 14% Monday afternoon after early gains.
The company previously snubbed an offer from Ashley for a £150 million interest-free loan, preferring a new financing package from creditors.