*This article was updated on 14/3/2019
Last week, Sports Direct (SPD) called on the department store chain Debenhams’ (DEB) to hold a shareholder meeting to appoint Mike Ashley as its new boss. Sports Direct – of which Mike Ashley is chief executive and which holds a near-30 per cent stake in Debenhams – is also seeking the removal of all other board members, except for Rachel Osborne who was only appointed as a director in September 2018. If granted, Mike Ashley plans to step down from current management duties at Sport Direct.
Initially, Debenhams said it was "disappointed" in Sports Direct’s "course of action", having already rebuffed offers of help from Mr Ashley as the department store struggles to maintain its relevance on UK high streets. In fact, just a matter of days after Sports Direct announced these intentions, Debenhams fired back, revealing it was in negotiations to borrow another £150m. Of this, £40m will be used to refinance a £40m bridge facility announced in mid-February.
Opinion is divided about which side is acting in the best interests of shareholders. As a major shareholder, Mr Ashley has been accused of protecting his own interests rather than trying to revive the company’s fortunes. Conversely, Mr Ashley himself has since accused Debenhams' board of misleading shareholders with its January trading update, which claimed the business was generating decent levels of cash, only for the £40m bridging loan to be announced weeks later.
In an effort to resolve matters altogether, Mr Ashley has stepped forward again, personally offering the group £150m, if his original demands are met. Debenhams has said it will consider the proposal, although it would still require the assent of credit facility lenders and noteholders to pursue this kind of refinancing.
