Debenhams to consider £150m loan

Sports Direct offers Debenhams £150m interest-free loan

British department store group Debenhams said on Thursday it would give "careful consideration" to a proposal from its biggest shareholder Sports Direct to provide a 150 million pounds unsecured loan.

In a letter Sports Direct said: "You were clearly aware of the uncertainties in the market in January, yet you were still willing to make a statement that "the group is now on track to deliver current year profits in line with market expectations", again an example of being wildly optimistic or at worst being deliberately misleading, to the point that the board and CEO have no place leading a plc or in making public statements to the market".

The Sports Direct boss has made no secret of his desire to bring Debenhams closer together with House of Fraser, the department store he bought out of administration previous year.

Two days after the latest profit warning, Ashley took matters into his own hands with an audacious bid to axe most of Debenham's directors and appoint himself to the board.

Debenhams said in a statement on Wednesday: "We reject these unfounded and self-serving complaints".

"If the 5% share issue and related "whitewash" was approved by Debenhams' independent shareholders, the £150mln loan would be guaranteed to be interest-free", read the Sports Direct statement.

Debenhams, which is thought to be looking at a larger refinancing and a Company Voluntary Arrangement that would involve the closure of stores and rent reductions across the rest of its estate, said that any third party loan offer on these terms would require both the consent of its current credit facility lenders and bond noteholders, as well as requiring material amendments to existing facilities.

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"Nevertheless, the board will give careful consideration to the proposal and will engage with Sports Direct and other stakeholders regarding its feasibility in the interests of all parties".

But if the conditions were not approved, the loan would bear 3% interest.

It is the latest move in the maverick businessman's high street shopping spree. Past year he bought both House of Fraser and Evans Cycles, and has previously been linked to bids for Patisserie Valerie and HMV.

Debenhams hit back saying the claims are not true.

In the trading statement in question, Debenhams noted it was "currently on track" to meet market expectations.

Mike Ashley is the founder and majority shareholder of Sports Direct.

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