Debenhams is forging ahead with plans for a £200m rescue deal with its lenders as it said a potential bid from Sports Direct would come too late to provide the funds needed to keep the department store afloat.
In a statement to the stock market, the ailing department store said it would give “due consideration” to any firm offer from Sports Direct, which announced on Monday that it was mulling a possible cash bid.
Debenhams said any proposal from Sports Direct must indicate a price, a clear plan for repayment of Debenhams’ £560m of debts, all of which would fall due on a change of control, and a plan to address the business’s immediate funding requirements.
Sports Direct, which already owns nearly 30% of Debenhams, has until 22 April to file a firm bid for the department store group. Debenhams shares rose 39% to 2.11p, valuing the equity at £26m. Ashley is understood to have held discussions with lenders about refinancing Debenhams’ debts but the retailer’s board is sceptical that he is serious about making an offer.
“There is no certainty that any offer will ultimately be forthcoming,” the company’s board said on Tuesday.
The potential bid is the latest in a flurry of tactics Ashley has tried to wrest control of Debenhams and prevent Sports Direct’s stake from being wiped out under a planned rescue refinancing.
The company is seeking to borrow up to £200m in a deal which would involve either a debt-for-equity swap with existing lenders or a pre-pack administration.
Sports Direct has previously offered Debenhams a loan of £150m, or to buy the group’s Danish chain, Magasin du Nord, for at least £100m as alternatives to the department stores group having to raise money from existing lenders. Ashley has also called a shareholder meeting at which he wants to oust all but one of Debenhams’ directors and install himself as chief executive.