Mike Ashley’s Sports Direct has offered Debenhams a £150m interest-free loan in exchange for an additional 5% stake in the company.
The move comes days after Debenhams confirmed it was in advanced negotiations to secure a loan of the same amount from existing lenders.
Under Sports Direct’s proposals, Ashley would become a director and the chief executive officer of Debenhams. The department store would use £40m of the cash injection to repay short terms loans and the remainder would be used as general working capital.
The loan would be interest free if Debenhams issued shares allowing Sports Direct to increase its stake in the business from 30% to 35%. If not, the loan would come with 3% interest charges.
Debenhams confirmed last night that it had received the offer and that the board would give “careful consideration” to the proposal.
Last week, Sports Direct called for a general meeting of Debenhams to appoint Ashley to the board of directors. The retailer has called for all current members of the Debenhams board, other than Rachel Osborne who became a director in September 2018, to be removed.