Sports Direct has given more detail on its possible cash offer for Debenhams, which would block the department store chain from entering a company voluntary arrangement (CVA) or pre-pack administration.
Mike Ashley’s retail empire is considering a possible bid of £61.4m for Debenhams. This offer would represent 5p in cash per ordinary share for the entire issued and to-be-issued share capital of Debenhams.
The possible offer is pre-conditional on the appointment of Ashley as CEO of Debenhams. Debenhams would also have to agree not to enter any third-party funding arrangements, including an administration or CVA.
The department store chain asked existing lenders for a £200m cash injection on 22 March. Some of the changes would result in no equity value for the company’s current shareholders. Under the Sports Direct deal, this request would have to be withdrawn.
Should Sports Direct make a firm offer, it would have to settle Debenhams’ current debts, amounting to £560m.
In the statement, Sports Direct said: “Sports Direct believes that the possible offer would offer fair and full value for Debenhams. It does not believe that Debenhams has the same value if it is (in effect) handed over to Debenhams’ existing lender group. As such, Sports Direct would expect the possible offer to be attractive to Debenhams shareholders and other stakeholders as an alternative to Debenhams’ current restructuring and refinancing process.”
“It is important to note that this is not an announcement of a firm intention to make an offer under Rule 2.7 of the Code and, accordingly, there can be no certainty that an offer will be made for Debenhams even if the pre-conditions to the possible offer are satisfied or waived.”
Sports Direct has until 22 April to announce a firm intention to make an offer for Debenhams.
Debenhams has previously said that any offer from Sports Direct would be “given due consideration by the board”. It declined to respond to the latest announcement from Sports Direct.