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Ashley has become convinced that Green is repeating the trick with Debenhams. This month he instructed his representatives to send a letter to lawyers acting for the chain, demanding to know whether Green was involved in providing £40m of new financing last month or brokering a new partnership with Li & Fung, a supplier Green is understood to have used at Arcadia. Green did not respond.
Green, who is busy hammering out his own restructuring plan for his sagging fashion empire, is said to believe that Ashley lacks the credentials to run Debenhams. A source close to the talks said Green would have “loved to stick a spoke in the wheels” of Ashley’s plans, but what he proposed was not workable.
What is workable for Debenhams in the longer term is not clear. Silver Point and the other funds that have swooped on the chain are more adept at financial engineering to make a quick buck than understanding the ever-changing tastes of British shoppers, and they have made no promises about providing backing for Bucher’s modernisation plans. In a tough fashion market, Debenhams is managing to hold its share, but scepticism surrounds the company’s longer-term prospects.
"Forget all this financial stuff — there is no reason for Debenhams to exist from a consumer perspective. It’s where brands go to die,” a senior industry source said.
And few who know Ashley expect his harassment to stop here. “Mike won’t sit back in a CVA situation and let them get the shops,” a source said. “He’ll go to the landlords and offer to pay the full rents.”
An insolvency expert who knows Ashley said: “If I was advising Mike, I would just f*** up the pre-pack process by saying, ‘Tell me what the lenders are bidding and I’ll bid £1 more’ It lends itself to Ashley just being an absolute terrorist. I suspect he’s going to cause havoc.”
4/4
Chris Wootton, deputy chief financial officer of Sports Direct, said shareholders were “sick and tired of being trampled underfoot” by the lenders. He labelled the restructuring a “long-planned theft” by a board that was at best incompetent, at worst in collusion with the hedge funds — a view that was given short shrift by a source close to Debenhams. “He is an idiot and the stuff he’s been saying won’t go unanswered,” he said. “It is an absolute disgrace. If Mike has something to say, he should just say it. Don’t get your 35-year-old financial controller to do it for you. It’s just pathetic.”
Debenhams has hit the buffers after 12 years struggling to shift a £1.1bn debt mountain accrued during a damaging period of private equity ownership, where serial dealmakers John Lovering and Rob Templeman sold off its best freeholds and took out 35-year leases subject to upward-only rent reviews. The private equity consortium refloated the business for £1.7bn in 2006. After last week, Debenhams was valued at just £33m.
The slide in fortunes has left the chain, which started out as a London draper’s shop in 1778, unable to invest sufficiently to compete with more nimble online rivals — an unenviable position made worse by management mis-steps. Former chief executive Michael Sharp and his successor, Bucher, badly underestimated the scale of the problems and the pace of change in retail, where nearly a third of non-food goods are now bought online.
However, as his rivals flee the high street, Ashley is doubling down. Backed by a £1bn credit line, he is buying failed chains out of administration — most notably House of Fraser, Debenhams’ closest rival, and Evans Cycles, where he is said to have waited for every other bidder to drop out of the race before halving his offer hours before the deadline.
Being outmanoeuvred by Debenhams’ lenders capped a bruising week for Ashley. The board of the online retailer Findel rejected an “entirely opportunistic” offer to buy out the shares he doesn’t own. Goals Soccer Centres, another Ashley investment, asked for dealing in its shares to be suspended because it had discovered accounting errors that were likely to damage its finances significantly.
When City analysts probed Ashley for the method behind his madness, he answered cryptically: “When all the fishes swim one way, I swim the other.”
His chaotic empire building has caused friction with Green, who has long been both a friend and adversary. Green is Debenhams’ largest concession holder. A former Arcadia insider said that some of Green’s brands generate a quarter of their sales from Debenhams stores. Green once dubbed Ashley the “Little Emp” to his Big Emp(eror), but the burly billionaires have not spoken since Green obstructed Ashley’s bid to buy HMV in February.
3/4
On Friday, Duddy threw down the gauntlet to his tormentor. Alongside an announcement that it had drawn down the first tranche of £101m, Debenhams said Ashley would either have to make a takeover bid that provided for full repayment of its £560m debts, or give up his campaign against the board and take part in a rights issue. The alternative is a pre-pack administration and sale to the lenders that would wipe out shareholders.
Ashley is not giving up. After claiming that other Debenhams shareholders were supportive of him becoming chief executive, he yesterday invited more investors to sign a petition to further his cause. “I think there might be another twist somewhere, but I’m not sure where,” said a source close to the tycoon. “He’ll be disruptive, that’s for sure.”
For all its troubles, Debenhams raked in sales of £2.9bn last year. Its perilous position promises a further wave of pain for landlords and concessionaires and suppliers — headed by Sir Philip Green, whose Arcadia Group brands trade through Debenhams’ stores and who has allegedly infuriated Ashley by covertly attempting to frustrate his efforts to seize control.
As Ashley felt his grip on the situation slipping away last week, he rattled the cage with increasing ferocity, throwing everything he could at the board. On Wednesday, he tabled an indicative offer to buy the company outright, further complicating the refinancing at the 11th hour by forcing Debenhams to convince the Takeover Panel that Ashley was more a menace than a serious suitor.
Ashley had already requisitioned a shareholder meeting as a means of deposing the remaining directors and installing himself as chief executive, before offering to buy Debenhams’ Danish department store chain Magasin du Nord for £100m to resolve its immediate funding needs. Just months earlier, he had warned the company not to part with it for anything less than £200m.
While Ashley bemoaned the ineptitude of the board for failing to halt the slide in Debenhams’ trading in recent months, a clutch of hedge funds moved into the box seat by buying the company’s debt from Royal Bank of Scotland and Allied Irish Bank, which were eager to cut their losses. After buying HSBC’s portion of Debenhams’ credit facility, Connecticut-based Silver Point Capital has positioned itself to call the shots.
Last week, Debenhams re-registered itself on Companies House as a private company, Debenhams Retail Limited — a sign that a pre-pack administration was close. “The board has lost control of that business and allowed it to fall into the hands of American hedge funds that will strip it to the bone. You can say what you like about Ashley, but at least he’s a retailer,” one insolvency source said.
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Why Debenhams cries - anything but Mike Ashley!
Wednesday evening, Terry Duddy surveyed a half-empty boardroom and allowed himself to breathe a sigh of relief. Shortly before the crisis meeting at Debenhams’ London head office, the mild-mannered chairman had learnt that the department store’s lenders had signed off a £200m financing package that would allow the 241-year-old company to fight another day — and probably evade the clutches of its biggest investor, Sports Direct’s Mike Ashley, who has been agitating for control.
However, the havoc created by Ashley’s uniquely aggressive brand of shareholder activism was evident in the empty seats around him. The belligerent billionaire booted Duddy’s predecessor, Sir Ian Cheshire, and chief executive Sergio Bucher off the board in January, leaving Duddy with just two other directors.
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sunday march 31 2019
Why Debenhams cries - anything but Mike Ashley!
The tracksuit tycoon is creating havoc in his dogged pursuit of failing Debenhams, writes Sam Chambers
The Sunday Times, March 31 2019, 12:01am
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On Wednesday evening, Terry Duddy surveyed a half-empty boardroom and allowed himself to breathe a sigh of relief. Shortly before the crisis meeting at Debenhams’ London head office, the mild-mannered chairman had learnt that the department store’s lenders had signed off a £200m financing package that would allow the 241-year-old company to fight another day — and probably evade the clutches of its biggest investor, Sports Direct’s Mike Ashley, who has been agitating for control.
However, the havoc created by Ashley’s uniquely aggressive brand of shareholder activism was evident in the empty seats around him. The belligerent billionaire booted Duddy’s predecessor, Sir Ian Cheshire, and chief executive Sergio Bucher off the board in January, leaving Duddy with just two other directors.
In the three weeks leading up to the meeting, Ashley’s lawyers had bombarded the depleted team with a near-daily barrage of public statements and private letters, accusing the directors of everything from misrepresenting Debenhams’ true financial position to defaming Ashley by suggesting that he was trying to disrupt the rescue deal.
That contentious rescue has, in effect, snookered the tracksuit tycoon, whose Sports Direct empire has lost an estimated £150m on its 30% stake, and handed control to a group of opportunistic American hedge funds. It paves the way for Debenhams to be taken private through a pre-pack administration, ahead of an insolvency process known as a company voluntary arrangement (CVA) to close a third of its 166 stores, with the likely loss of thousands of jobs.
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HK85
I feel he will explore all options and bid will be his last resort.
Bid will be last resort in the 11th hour. If MA had the intentions to bid he would have done it by now. He wants to see if other options are available in terms of control.
DF/AU
The only SH to underwrite here is SPD others are not bothered to underwrite anything Brandes has been consistently selling their stock.
If SPD backs off none of the others have made a single comment in taking over or support for SPD they are all watching from sidelines. So IMHO if SPD says let it go this goes pre pack no 2 ways about it.
can happen before or after as long as decision is made rather to go for it or let it go. the BOD will then carry on transfer to SPD or to bond holders whatever the majority SH of DEBS decide to do.
My opinion is it's best to take what's available rather to wait for something desirable only in terms of stock market.
Bid can come 11th hour on the 8th don't rule out anything.
well if I was you I will cash out.
Then buy back if it goes low sometimes waiting for 100% up you can go 50% down.
There will be very little or no leak as BOD has played their hand and MA is not predictable he does things in public in newspapers so let's wait and see there will be more swings in this so you may have the opportunity to make money or lose money.
To play in this stock at this time you needs lot of balls really as you will never know when you will get under water.
Tomorrow morning RNS 7am should say something about the letters sent to DEBENHAMS and what's the plan of action.
I think deal could be done few all parties are willing to take a hair cut assuming MA can convince them this is heading Administration in few months and won't get them what he can offer now.
SCULLS
I hope you appreciate that I'm not a deramper this was my long term investment which is now day to day roulette.
I am giving 24h to this every day always looking for more information about what the hell is going on so I have done lot of research but I don't go on crazy like some idiots on Twitter.
ODEY are the 3rd largest holder after SPD, Phoenix in Sports Direct and are very supportive of MA.
ODEY is the largest shorter of Debenhams with just under 8% and recently acquired 5.23% in DEB as direct holding.
So I think they could have more inside info due to their links with MA via SPD holdings so if they get rid of their direct holding of 5% plus then their could be a clue MA may not bid or do.anything getting DEBS SH wiped off.
Another thing I noticed was JP Morgan reduced their stake to under non reporting stake and now has increased to 5% on the other hand Brandes has been consistently selling and reducing that's just my observation.
HK
There won't be much difference if you bid and take over or other ways of funding. Option 2 the incompetent BOD in place atleast with bid you get rid of the crap.
HK85
We all need to be pragmatic and be thinking of best and worst outcomes.
We can't rely on MA to save us as he will be looking after his own interests also SPD SH.
I think another clue is ODEY reducing their stake of 5% if they do We care doomed if ODEY is still in we have a chance as they are major holders in SPD having said that sometimes the RNS is a day behind and we could all be under the pump before we know.
SCULLS
Well I'm telling his characteristics he's as predictable as Donald Trump. One day he will call little rocket man another day CHAIRMAN Kim is a fine man. You will be confused which way this will swing.
SCULLS
No entrepreneur buys 100% of any company they all do bit by bit.
MA is a billionaire and these people's ego is far bigger than money and sometimes they will just do it as they want regardless of the cost as money is just paper to them.
However he will have to pay or get it refinanced up to 500m plus 43m for 70% stake and I feel nothing will be concluded until April 8 and people should hold on rather than just buying the stock.
There are lot of benefits in buying DEBS however cost is enormous and MA is a cheapskate so good luck if you think he will do it for the 70% holders.
As far as im concerned he has saved my bacon im grateful to him. Infact I'm willing to meet him personally and say Thank you.
I have also done the letter that's been created on SPD website.
SCULLS
I don't have dump bag like you in my contacts.
I will make money regardless when it drops I will buy and if it goes up i will buy.
I'm not risking big money after getting money back. It's a small punt but idiots like you can destroy others with your stupid and dumb tactics.