UK sportswear retailer Sports Direct has offered UK department store chain Debenhams a £150m unsecured term loan, in a move to take control of an additional 5% share and appoint Sport Direct CEO Mike Ashley as the chain’s CEO.
Around £40m of the total loan amount will be used to refinance the new secured bridge facility announced by the company on 12 February. The remaining £110m will be available for general working capital.
The announcement follows a recent statement from Debenhams that it is in advanced negotiations with its current lenders to raise about £150m of additional facilities after Ashley served a notice to Debenhams, in a boardroom coup, for the removal of all its current board members and assume the role of CEO.
Debenhams said: “Debenhams acknowledges Sports Direct’s statement issued at 6.30pm last night and confirms receipt of its proposal to provide a £150m, unsecured 12 month term loan to the company, subject to certain conditions.
“Any third party loan offer on these terms would require both the consent of our RCF Lenders and Noteholders and material amendments to existing facilities.
“Nevertheless, the board will give careful consideration to the proposal and will engage with Sports Direct and other stakeholders regarding its feasibility in the interests of all parties.”
Debenhams is expected to submit a proposal to its independent shareholders to approve the 5% acquisition, which would increase Sports Direct’s interest in the company to 35%. If approved by Debenhams’ independent shareholders, the £150m loan would be guaranteed to be interest-free.
Sports Direct has also mentioned that that it would offer the loan at 3% interest, if the shareholders reject the 5% stake.