Sports Direct offers £150m loan to bail out Debenhams

Sports Direct offers Debenhams £150m interest-free loan

Debenhams has said it will "give careful consideration" to Mike Ashley's Sports Direct offer of a £150m loan.

In a letter Sports Direct said: "You were clearly aware of the uncertainties in the market in January, yet you were still willing to make a statement that "the group is now on track to deliver current year profits in line with market expectations", again an example of being wildly optimistic or at worst being deliberately misleading, to the point that the board and CEO have no place leading a plc or in making public statements to the market".

However, Debenhams are looking at the proposed loan from Ashley, they further said any loan would require the backing of their lenders and "material amendments" to existing facilities. Articles appear on euronews.com for a limited time. It added that if it is not approved, the loan would come with an interest of 3 percent.

The loan would see Debenhams use £40 million to pay down existing debt and the remaining £110 million available for working capital.

Sports Direct said the retailer's January trading update was "at best impossibly optimistic or at worst deliberately misleading".

The letter provides an insight into the toxic relationship that has developed between the two sides, revealing that Sports Direct reported Debenhams to the UK Listing Authority and the financial services regulator after being given a preview of the planned profit warning.

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In January Debenhams said it was "on track" to deliver current year profits in line with market expectations. Last week, he launched a move to take over running the ailing company.

"Mike Ashley would become a director and the CEO of Debenhams".

British department store Debenhams on Wednesday rejected what it said were "unfounded and self-serving complaints" from shareholder Sports Direct about its communications to the market before it warned on profit earlier this month.

The company responded with the letter, which accused Debenhams of being "misleading" by stating in January that it continued "to generate cash", despite ongoing discussions to refinance the business.

Mr Ashley tabled a proposal last Thursday for a shareholder meeting to remove "all of the current members of the Debenhams board", other than finance chief Rachel Osborne.

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