Debenhams’ board has won more time to rally shareholders and sort out its finances ahead of a coup attempt by Mike Ashley, after a clerical error by Sports Direct.
A shareholder meeting at which Ashley wanted to oust all but one Debenhams director and install himself as chief executive has been delayed by up to two weeks, after Sports Direct was forced to reissue its requisition notice calling the meeting.
In a statement issued on Thursday morning, Sports Direct said its initial requisition notice, put out on 7 March, was invalid because at the time it had held its shares in a third party account. The statement now resets the timetable, giving the Debenhams board 21 days to name a date for the meeting, which must then be held within 28 days of the notice, taking the final possible date to 9 May.
One source said: “The name on the letter didn’t match that on the shareholder letter. It’s a cock-up not a conspiracy.”
The error gives the Debenhams board more time to persuade other shareholders to support its turnaround plan and vote against the arrival of Ashley, who has offered to lend the company £150m in return for the chief executive post.
The company sees this as an attempt to wrest control of the department stores group on the cheap.
Ashley’s aim to take the helm at Debenhams is complicated by the terms of some of its loans and bonds, which would enable creditors to call in their debts in the event of a change of control. That would put the company into administration, handing control to lenders.
A rent bill of £50m is due on Monday, but it is understood the company has sufficient funds to finance that payment.
However, it is trying to finalise plans to raise at least £110m in new cash and refinance a £40m short term loan agreed in February as it battles for survival. The company is thought to be seeking to borrow up to £160m in new cash as its finances suffer amid the uncertainty over its future, which has prompted many suppliers to demand cash for goods up front.
The company also needs to refinance £520m of longer-term debt which expires next year.
Debenhams’ board is still in talks with Ashley about his proposals but is understood to be keen to persuade him to subscribe to new equity as part of a wider refinancing package.