Economy

Debenhams rejects Mike Ashley's £150m offer

Debenhams rejects Mike Ashley's £150m offer

Sports Direct said it was "disappointed" by the decision and warned there was likely to be a "significant and negative impact on Debenhams' current shareholders and other stakeholders, including suppliers and employees" if the board did not engage in talks.

FILE PHOTO: FILE PHOTO: Mike Ashley, founder and majority shareholder of sportswear retailer Sports Direct, leads journalists on a factory tour after the company's AGM, at the company's headquarters in Shirebrook, Britain, September 7, 2016.

Sports Direct's £150 million rescue offer for Debenhams has been rejected, putting the department store chain on course for a probable administration. Debenhams' shares plunged 10.3 per cent, or 0.21p, to 1.83p last night as lenders, including USA hedge fund Silver Point Capital, prepared to seize control.

The retail chief is reported to have offered the package over the weekend, with attached conditions including that he is made its chief executive.

Ashley also called for the department store chain's shares to be suspended and asked industry regulators to investigate how the company is being run.

Yesterday the tussle between the two retailers took a freakish turn as Ashley continued to fight to stop the department store from entering into a pre-pack administration.

He's taken a lie detector test to verify his memories of meetings with the Debenhams board, and is asking Debs' bosses to do the same.

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At the time Debenhams Chief Executive, Sergio Bucher said: "Today's announcement represents the first step in our refinancing process". It has until April 22 to decide whether to do so.

Mr Ashley has around a 30% stake in the department store, which has branches in Ipswich and Bury St Edmunds, but would be wiped out if it goes ahead with the £200 million refinancing plan it announced in March.

The billionaire tycoon also said that Sports Direct is still giving "active consideration" to a conventional takeover of the high street firm.

Laith Khalaf, a senior analyst at Hargreaves Lansdown, said the strings attached to Ashley's offer looked too much for the lenders to swallow.

Debenhams has already said it needed to shut 50 stores in the coming years.

If it can not agree a rescue deal its lenders will take control of the company later on Monday.

With a deadline looming that would give the lenders full control of Debenhams, Ashley has stepped up efforts to beat them to it.