Mike Ashley makes £100m offer for Danish arm of Debenhams | Business

Mike Ashley’s Sports Direct group has offered to buy Debenhams’ Danish business, Magasin du Nord, for at least £100m in the retail boss’s latest tactic to win control of the ailing department store chain.

The attempt came as Debenhams admitted that its attempts to raise cash to secure the future of the business could wipe out shareholders, including Sports Direct, which has a 30% stake.

Sports Direct said it had offered to buy the Danish chain “in order to assist Debenhams with its short-term liquidity requirements”, with the offer understood to have been made this week.

Debenhams is battling for survival and the department store confirmed on Friday that it was asking its bondholders for consent to borrow up to £200m more, £40m of which will be used to refinance a short-term overdraft agreed in February.

The company said the new money would give it the “ability to pursue restructuring options to secure the future of the business”. However, it admitted “certain of these options – if they materialise – would result in no equity value for the company’s current shareholders”.

The company already has £520m of long-term debt, which must be refinanced by next year, and is encountering cash flow problems as suppliers demand upfront payments amid uncertainty over its future.

Sports Direct suggested its offer for Magasin, which the department store attempted to sell for more than £200m before Christmas, could be raised as it said if Debenhams thought the chain was worth more it should “provide further details”.

It added that Debenhams would have a 12-month option to buy back Magasin at the price at which it was sold to Sports Direct or to sell it to another party for a higher price and benefit from the difference.

Sports Direct, which owns nearly 30% of Debenhams, also reiterated its call for Ashley to be made chief executive in order to “assist Debenhams through its restructuring process”.

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The statement said: “Sport Direct believes its proposal would provide additional management and first-class leadership to Debenhams through this challenging period of restructuring, together with additional funding.”

Sports Direct has called a shareholder meeting at which Ashley wants to oust all but one Debenhams director and install himself as chief executive. That event has been delayed by up to two weeks after a clerical error meant Sports Direct had to reissue its requisition notice calling the meeting.

Ashley’s attempt to take charge of Debenhams is also 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, giving control to lenders and wiping out shareholders, including Sports Direct.

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