Debenhams facing administration after rejecting Mike Ashley’s rescue bid

Sports Direct chief offers to underwrite Debenhams rescue for CEO job: Financial Times

Sports Direct says Debenhams has rejected its offer to inject £150m into the troubled department store chain.

In a letter to the Debenhams board dated April 5, Sports Direct said it would be willing to underwrite the group with 150 million pounds in cash if Ashley was named as CEO, the FT said.

"It seems most likely therefore, that Debenhams shares will soon cease to have any value, as lenders take full control of the retailer".

The struggling United Kingdom retailer is preparing a so-called prepackaged administration under which shareholders -including Sports Direct with a roughly 30pc stake - would likely lose their investments.

While the shops would continue trading for now, Debenhams has proposed closing around 50 branches from next year and renegotiating rents with landlords to tackle its funding problems.

"Sports Direct believes that, in the continued absence of any such engagement from the board of Debenhams and Debenhams' lenders, there is a likely significant and negative impact on Debenhams' current shareholders and other stakeholders, including suppliers and employees".

It's been an extraordinary tussle for control of Debenhams.

It will effectively put the firm's creditors in control of what happens now. Despite almost £3bn of sales a year ago, the business is now worth less than £30m as its share price has crashed to less than 2p.

Debenhams could still opt for Ashley's pre-pack deal, a decision which may be announced on Tuesday morning.

The 2018 announcement came after the chain reported a tax loss of £491.5million.

It will be business as usual for its shops and staff.

"As such, Sports Direct is disappointed with Debenhams' response". That plan will now be accelerated, with up to 20 expected to go in early 2020 through a restructuring process with landlords.

Ashley already owns almost 30 per cent of Debenhams, and has called for an investigation into the firm's management.

He's taken a lie detector test to verify his memories of meetings with the Debenhams board, and is asking Debs' bosses to do the same.

The struggling department store, which has 165 stores and employs about 25,000 people, reported a record pre-tax loss of £491.5m past year.

As well as Sports Direct, Mr Ashley runs House of Fraser, Evans Cycles and Flannels.

The struggling giant has been locked in talks over recent weeks with Sports Direct over a rescue package which would see Mike Ashley installed as Debenhams' CEO and £150m pumped into the ailing firm's coffers.

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