Debenhams on brink of administration as Ashley bid rejected
Debenhams plc, which has five stores in Northern Ireland, has rejected Mike Ashley's latest offer to rescue the troubled retailer only hours after he disclosed it.
The billionaire's Sports Direct International company said Debenhams turned down a proposal to issue £150m in new shares, as a deadline for talks with creditors looms.
Mr Ashley said earlier that he had offered to underwrite the shareholder rights issue in a move to prevent him from losing much of his equity investment in the retailer.
Even after Debenhams rejected the plan, Ashley said a cash offer valuing the store chain at £61m remained an option. He called on the company and its lenders to "actively engage in negotiations".
Mr Ashley is locked in a battle with Debenhams lenders, including banks and US hedge funds, as the company seeks to restructure about £720m of debt.
The struggling UK retailer is preparing a so-called pre-packaged administration under which shareholders - including Sports Direct with a roughly 30% stake - would likely lose their investments.
Prepack administration is typically a court-based process that can allow creditors to take control in a pre-agreed plan while the company continues to operate as normal. It doesn't require shareholder approval.
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Mr Ashley's latest offer came after Sports Direct accused Debenhams of "a sustained programme of falsehoods and denials".
In a statement late on Sunday, it called for board members of the department-store company to take lie-detector tests.
Mr Ashley, the chief executive of Sports Direct, said his support for the rights issue would have been conditional on him being named chief executive of the department store chain, a request that was previously a sticking point in negotiations.
Debenhams shares, which have fallen more than 90% over the past 12 months, were down 14% on yesterday afternoon after early gains.
The latest proposal from Mr Ashley would have been subject to Debenhams creditors agreeing to write off £148m in debt. It also included the lenders swapping another £122m of debt for shares.
The company has previously snubbed an offer from Mr Ashley for a £150m interest-free loan.