Mike Ashley accuses Debenhams of ‘falsehoods’ after tabling rescue bid
Sports Direct tycoon Mike Ashley has torn into Debenhams executives, accusing the board “falsehoods and denials” after tabling a £150 million rescue offer.
The maverick billionaire called on Sunday night for the board of the struggling high street chain to be investigated, two members to undergo lie detector tests, and trading in its shares to be suspended.
As well as accusing Debenhams bosses of “a sustained programme of falsehoods and denials”, the sportswear chain founder added that in a meeting “misrepresentations were made to induce Sports Direct into signing a non-disclosure agreement, locking them out of any ability to trade in the bonds or equity of Debenhams for a period of time”.
In an extraordinary outburst, Mr Ashley claimed that he and two colleagues subsequently took lie detector tests, with the results showing “without any doubt” that they were telling the truth in their recollection of the meeting.
Sports Direct has now called for Debenhams interim chairman Terry Duddy and non-executive director David Adams to take their own lie detector tests to “clarify their recollection of this meeting”.
Mr Ashley has a near-30% stake in the department store but faces wipeout if the department store presses ahead with a £200 million refinancing plan announced in March.
Under the proposal, £101 million is to be drawn down immediately, in order to allow restructuring, which will include store closures and rent reductions.
The other £99 million would have been made available if Sports Direct – or any other shareholder with a stake of more than 25% – fulfilled one of two conditions by April 8.
One option allowed Mr Ashley to make a takeover offer which included arrangements to refinance the group’s debt.
Alternatively, he had to call off an emergency meeting he requested to install himself on the retailer’s board and commit to either providing funding for the business or underwriting the issue of new shares.
He tabled a last-minute rescue package on Friday, which still depends on him being made chief executive.
In it, the Newcastle United owner offered to underwrite a £150 million rights issue for Debenhams.
It would form part of a “comprehensive refinancing” of the struggling department store chain and would see Mr Ashley appointed as Debenhams CEO and would be contingent on the retailer’s lenders agreeing to write off £148 million of debt.
The billionaire tycoon also said that Sports Direct is still giving “active consideration” to a conventional takeover of the high street firm.
“Whilst Sports Direct continues to actively evaluate all possible options to support Debenhams, it wishes to clarify that, as a technical matter, were it to complete, the equity issuance would be an alternative transaction to the possible offer and vice versa.”
If Mr Ashley’s overtures are rebuffed, Debenhams is likely to go into administration this week with its lenders seizing control.