LONDON (Alliance News) - Debenhams PLC responded to Sports Direct International PLC's offer to buy its Danish business for GBP100 million by saying the proposal does "not address the company's funding and restructuring requirement".
Shares in the struggling department store were down 40% Friday in midday trading at 1.70 pence each. The shares traded as low as 1.10p earlier in the day, having changed hands as high 25p within the past year. Sports Direct was trading 0.9% higher at 290.30p.
The offer for Magasin Du Nord comes with the condition that Sports Direct chief Mike Ashley is put in charge of the rest of Debenhams.
Debenhams said this proposal has "obvious concerns" as Mike Ashley owns Debenhams' "direct competitor" House of Fraser. If appointed, Sports Direct said, Ashley would step down from his current roles as a director & CEO of Sports Direct.
Debenhams accused Sports Direct of not "balancing the interests of all stakeholders". The offer, according to Debenhams does not come "with any commitment to participate in the wider financing solution".
The retailer said: "The board has remained open to engagement with Sports Direct throughout its refinancing process and has provided clear guidance on what would represent workable solutions that would allow Sports Direct to participate while also protecting the interests of other stakeholders. This guidance has been repeatedly ignored by Sports Direct."
Sports Direct, which holds a 29% stake in Debenhams, earlier on Friday said that it "wished to confirm" an offer to acquire Magasin Du Nord for GBP100 million in cash. The unit was put up for sale last year.
Under Sports Direct's proposal, Debenhams would have a 12 month option to buy back Magasin Du Nord at the price at which it was sold to Sports Direct.
Debenhams would also have the right to continue to market the business, gaining the benefit from any uplift above the initial sale consideration if it was sold to a third party within the 12-month period.
Debenhams replied by saying Magasin is a "key part" of the company and is cash flow generative and a "meaningful contributor" to group profits. Adding: "As such, Magasin is an important part of any lending proposition and therefore any broader solution that protects value for the group."
Meanwhile, Debenhams' board is facing removal after receiving a requisition notice by Sports Direct on Thursday. Sports Direct is looking to oust all Debenhams directors bar Rachel Osborne, who was appointed in September.
Also Friday, Debenhams launched a consent solicitation with its bondholders in order to seek permission to raise GBP200 million by amending the terms of its loan notes.
So far, Debenhams said that noteholders with around 30% of the notes are supporting of the company's proposed changes and have agreed to vote in favour of them.
The amendments to the notes will allow the company to secure new money providing liquidity headroom for Debenhams' future funding needs and delivering stability, the retailer said.
The amendments to the notes will allow the company to secure new money providing liquidity headroom for Debenhams' future funding needs and delivering stability, the retailer said.
