Debenhams lenders rebuff improved Sports Direct proposal

(Sharecast News) - Mike Ashley's Sports Direct made an improved proposal to Debenhams on Tuesday morning, offering to underwrite a larger rights issue and reducing its demands for lenders to write off debt.Ashley offered to underwrite a £200m rights issue, up from the £150m he proposed a day earlier, if the lenders write off £82m of Debenhams' £720m total debt, trimmed from his demands for a £148m write-off a day earlier, and said it should appoint him as chief executive "as soon as practicable" rather than immediately.But the lenders quickly confirmed to Debenhams that even with improved terms, this was "not sufficient to justify an extension to the 8 April deadline" for the company to be put into administration.Debenhams has confirmed that the next stage of its process with lenders will result in zero equity value for current shareholders, such as 29.9% owner Sports Direct, with the holding company of the troubled department store group expected to be put into a pre-pack administration before the end of the week, where its lenders will swap their debts for equity and taking control of the operating business.Ashley urged the Debenhams board to again consider Sports Direct's 5p per share possible takeover offer, which was announced at the start of last week.Despite having accused the Debenhams board over the weekend of "a sustained programme of falsehoods and denials" and called for lie detector tests to be used to settle a disputed meeting, Ashley urged them "to engage with Sports Direct to find a solvent solution for Debenhams which is in the best interests of all of Debenhams stakeholders" and said he was "available to discuss this at any time".Debenhams said it anticipated making a further announcement on Tuesday following further discussions with its lenders and requested that trading in its shares be suspended with immediate effect, pending such an update. Sports Direct shares, meanwhile, were down 0.4% to 279.8p in early trading.Analyst John Stevenson at Peel Hunt said the announcement of a pre-pack administration later on Tuesday looked likely, which he said would wipe out current shareholders but result in minimal disruption to the business, employees and suppliers ahead of any restructuring of the store estate.