Sports Direct has disposed of its 4.6% stake in Debenhams, instead entering into a put option agreement covering 74,185,742 shares in the department store, the equivalent of a 6.1% stake.
Debenhams entered into a put option agreement for the equivalent of a 6.6% stake on January 16, 2014. Collectively, these investments represent a 12.7% interest in Debenhams’ ordinary shares.
The option gives Mike Ashley’s Sports Direct a maximum exposure of £46m, said the sportswear retailer in a filing to the stock exchange on Thursday.
If Debenhams shares are below a certain level known as the ‘exercise price’ when the option expires, Sports Direct can either buy the Debenhams shares at the agreed level or pay a cash settlement value. If they are above the exercise price, Sports Direct will receive a premium.
“Sports Direct continues to work together with Debenhams and looks forward to building a long-term relationship,” said the sportswear retailer in a statement.