Mike Ashley Offers To Underwrite Debenhams Rescue But He Must Be Appointed As CEO

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    Today, citing two sources, the Financial Times reported that Mike Ashley, the owner and chief of Sports Direct, has offered to underwrite a 150 million pound rights issue at Debenhams on the condition that he is named as the CEO of the British department store chain.

    In a separate report, the Sunday Times disclosed that the owner of the sportswear company is also considering a 60 million pounds takeover bid for Debenhams this weekend.

    Citing an unnamed source, the Sunday Times said that a formal offer is being placed together by him and would come with conditions.

    Last week, Debenhams was able to secure 200 million pounds in new funds, however, it warned that shareholders still face being wiped out unless it secures financial support from Sports Direct, which holds an almost 30 percent stake in the company.

    Debenhams set Ashley a deadline of Monday night to offer a bid for the company. Debenhams said that Sports Direct must either underwrite a rights issue of new stock, make a firm offer for the group, or render debt funding if it wanted to prevent Debenhams from falling into the hands of its lenders.

    The latest offer from Ashley could give him a majority stake in the troubled company if the other investors do not participate in the rescue rights issue.

    The deal would be structured so that the stores would be able to continue trade without affecting suppliers or shoppers, however, the stakes of the shareholders would be rendered worthless.

    The FT reported that in a letter that was addressed to the Debenhams board dated April 5, Sports Direct said that it would be willing to underwrite the group with 150 million pounds in cash if Ashley was named as the CEO of the company.

    Last year, Sports Direct acquired House of Fraser, a department store chain, out of administration and it has been trying to wrest control of Debenhams for months to further improve its presence in the sector.