Mike Ashley owned Sports Direct said that ailing retail chain Debenhams has cancelled its offer of £150 million to help it out of current crisis. The offer was made on condition that Debenhams accept Mike as the CEO and he is engaged in a vicious battle with the group’s board of directors for control for since a long time. Mike has even accused the existing board of Debenhams of continuing its program of denials and falsehoods that have led to existing troubled state. After this rejection Debenhams will move into administration and when that will become a reality, existing shareholders inclusive of Mike A would be gone.
Though all its existing stores will continue trading Debenhams announced that next year 50 branches will be closed down and it will renegotiate rents with landowners to manage its financing issues. Sports Direct stated that it was unhappy with the reaction to its plan as it was planning to raise the funds through issuance of new shares and also urge lenders to write off £148 million of the chain’s debt. However the tussle between lenders and board members to take control of Debenhams has been extraordinary and all attempts by Mike Ashley have been cancelled by lenders.
The store chain has debt of £560 million and now it is at the mercy of lenders who are making the decisions. Though it had sales of nearly £3 billion last year its business is now valued lower than £30 million as its share price has fallen to lower than 2p and the board accepts that its lenders are the best rescuers so it is willing to take over administration. Life will go on for the stores’ employees, Sports Direct has called for investigation into the firm’ activities and suspension of share trading on bourses. Debenhams, which has around 165 stores and 25,000 employees, had reported loss before tax of £ 491.5 million during last year.