Sports Direct has offered to buy Debenhams’ Danish business, Magasin du Nord for £100m.
Magasin du Nord was put up for sale by Debenhams last year.
Debenhams would also have the right to continue to market the business, gaining the benefit from any uplift above the initial sale consideration were it sold to a third party in that 12-month period.
As part of the deal, Sports Direct founder and CEO Mike Ashley would become a director and chief executive of Debenhams.
Sport Direct said it believed its proposal would provide “additional management and first class leadership to Debenhams through this challenging period of restructuring, together with additional funding”.
Debenhams said it has responded to Sports Direct directly saying that the deal ”does not address the company’s funding and restructuring requirement, while balancing the interests of all stakeholders”.
It added: “Magasin is a key part of the Debenhams group, is cashflow generative and a meaningful contributor to group profits. As such, Magasin is an important part of any lending proposition and therefore any broader solution that protects value for the group. Further, there are obvious concerns with the proposal that Mike Ashley becomes CEO of Debenhams, given that Sports Direct owns our direct competitor, House of Fraser.
“The board has remained open to engagement with Sports Direct throughout its refinancing process and has provided clear guidance on what would represent workable solutions that would allow Sports Direct to participate while also protecting the interests of other stakeholders. This guidance has been repeatedly ignored by Sports Direct.
”Debenhams continues to make progress with its refinancing and restructuring discussions with existing lenders, Noteholders and other stakeholders. The board remains open to constructive involvement from Sports Direct and other stakeholders in this process.”
Debenhams announced earlier this month that it was in advanced negotiations to secure a £150m lifeline from its existing lenders, after receiving an initial cash injection of £40m in February.
Just days later, Sports Direct offered Debenhams a £150m interest-free loan in exchange for 5% stake in the company, as part of a takeover bid.
Today reports emerged that Debenhams will secure £200m in funding in a matter of days, which could help the struggling department store resist Ashley’s takeover.