Sports activities Direct, which dramatically ousted the chairman of Debenhams on Thursday, has accused the division retailer’s administrators of “dereliction of responsibility” for turning down a £40m interest-free mortgage supplied by the sports activities chain earlier than Christmas.
In a letter to the chair of the housing, communities and native authorities choose committee of MPs, printed on Friday, Sports activities Direct stated: “If Debenhams does fail, the accountability for that may relaxation solely with the Debenhams board.”
It stated its provide of a £40m interest-free mortgage earlier than Christmas had been made in “good religion and the board might need to rethink … whether or not turning down our newest provide of help was a dereliction of responsibility”.
Debenhams, which has internet money owed of £286m, is in talks with its bankers about refinancing earlier than its present mortgage amenities expire subsequent 12 months. The group urgently must discover a new technique to elevate money after halting the deliberate sale of its Danish Magasin du Nord chain when it did not obtain sturdy sufficient presents.
Debenhams stated it had not dominated out any choices, together with an insolvency course of that would velocity up a plan to shut as much as 50 of its 165 UK shops over the subsequent 5 years.
Nevertheless, the corporate turned down the £40m mortgage from Sports activities Direct as a result of it got here with a requirement for safety over some Debenhams’ property that might have given Ashley’s firm a preferential place over different shareholders.
Sports activities Direct additionally demanded the suitable so as to add one other 10% to its shareholding with out making a proper takeover bid for the entire firm. Beneath Takeover Panel guidelines anybody with extra greater than 29.9% should make a bid for the entire firm. Debenhams feared such an settlement would give Ashley management of the corporate on a budget.
On Friday Debenhams stated: “As said in December, we welcomed Sports activities Direct’s said intention to show their willingness to help Debenhams. As a result of the provide got here with circumstances that would have an effect on the pursuits of different stakeholders, the board felt it couldn’t settle for the proposal.”
Changing into a serious lender to Debenhams could possibly be useful within the Sports activities Direct founder Mike Ashley’s intention to construct a better relationship between it and his struggling Home of Fraser division retailer chain – which Sports activities Direct purchased out of administration in August.
Debenhams has already been weakened by the ousting of its chairman and chief government from the boardroom on Thursday after main shareholders Sports activities Direct and Dubai-based retail billionaire Micky Jagtiani’s Milestone Assets voted towards them on the retailer’s annual shareholder assembly.
The chairman, Sir Ian Cheshire, stepped down instantly whereas the chief government, Sergio Bucher, will keep on however not as a director.
The Guardian has realized that the Debenhams’ interim chairman, Terry Duddy, met Sports activities Direct’s Ashley quickly after the assembly and held “constructive” talks on methods to transfer ahead.
Cheshire, who is known to have had a troublesome relationship with Ashley, didn’t announce his resignation on the assembly as advisers tried to influence Jagtiani to vary his thoughts proper up till the ultimate vote was held.
Sports activities Direct has not commented on its causes for voting towards Cheshire and Bucher.
Nevertheless, the letter to the parliamentary committee printed on Friday made its frustrations clear, stating that Sports activities Direct had already written off in extra of £100m over its funding in Debenhams.