Debenhams rejects Sports Direct's £150m proposal, admin filing now likely Tuesday

Sports Direct said Monday that Debenhams has rejected its offer to underwrite a £150 million equity issuance by the troubled retail chain. Debenhams had until 17:00 Monday to decide what to do about the Sports Direct proposal but the latter issued a statement shortly after 15:00 saying the answer was a ‘no’.


It looks like the end of Debenhams in its current form

It now seems likely that an administration filing will happen on Tuesday, structured to affect Debenhams Plc, but not the retailer's trading operations. Shareholders would be wiped out but the business would continue to trade. Suppliers, staff and pensioners would still be paid, and management would stay in their roles. However, around 50 stores are expected to close at some point with a large number of job losses. 

And Sports Direct is clearly not happy at that. In the statement it said that it “had sought to constructively engage with the board, including over the weekend, in order to put together a proposal for a solvent solution in the form of a £150 million pre-emptive equity issuance to existing Debenhams shareholders. Sports Direct believes that the Equity Issuance, which would have formed part of a comprehensive refinancing, should have been deliverable with the co-operation of Debenhams and its existing lenders.

“As such, Sports Direct is disappointed with [the] response. [It] believes that, in the continued absence of any such engagement from the board of Debenhams and [its] lenders, there is a likely significant and negative impact on current shareholders and other stakeholders, including suppliers and employees. Sports Direct therefore calls upon the board of Debenhams and its lenders to actively engage in negotiations.”

The company also said it “continues to actively evaluate all possible options to support Debenhams [and] to give active consideration to its pre-conditional possible offer [for the company] at 5p in cash per ordinary share announced on 25 March.”

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