(Reuters) - Sports Direct said on Wednesday it has made an alternative loan proposal to Debenhams, just as the department store chain was on the brink of securing funds to fend off Mike Ashley’s bid to take charge of the company.
Mike Ashley, the founder and majority shareholder of Sports Direct, launched a coup last week to take over running the ailing firm, seeking to remove most of the board and install himself in an executive role. Sports Direct owns nearly 30 percent of Debenhams.
Debenhams, struggling with net debt of almost 300 million pounds and hit by the rapid shift online and weak consumer spending, then said it was in advanced talks with lenders for additional loans of about 150 million pounds ($198 million).
The alternative deal proposed on Wednesday, which applies “on or before 31 March 2019”, includes a loan on similar terms but in return Sports Direct wants to be issued with about 5 percent of new shares and Mike Ashley be made a director and the chief executive of Debenhams.
If the 5 percent share issue and related conditions are approved by Debenhams’ independent shareholders, the 150 million pounds loan would be guaranteed to be interest-free, Sports Direct said, adding that if not approved, the loan would bear interest at 3 percent.
Debenhams declined to respond immediately.
Debenhams also rejected complaints from Sports Direct about an earlier disclosure to the market ahead of a profit warning this month.
Reporting by Justin George Varghese in Bengaluru and Paul Sandle in London; Editing by Elaine Hardcastle