Ashley attacks Debenhams for profit warning
SportS Direct has accused Debenhams of misleading investors after the department store chain rushed out a profits warning just weeks after saying it was on track to meet forecasts.
It is the latest skirmish in a battle between the two firms as Sports Direct boss Mike Ashley tries to orchestrate an audacious boardroom coup at Debenhams and become chief executive of the struggling group.
In a letter to the Debenhams board, Sports Direct accused the retailer of ‘being wildly optimistic or at worst being deliberately misleading, to the point that the board and chief executive have no place leading a plc or in making public statements to the market’. Ashley has even said he would stand down from his job as chief executive of Sports Direct to concentrate on reviving Debenhams.
the 54-year-old, who owns nearly 30pc of Debenhams, upped the stakes again last night, offering the chain an alternative to the current refinancing deal it is thrashing out with lenders.
through Sports Direct, he offered Debenhams a £150m unsecured loan, £40m of which will go towards paying off the emergency funding it secured last month.
Sports Direct said it will offer the loan interest free on the basis that it is given an additional 5pc stake in Debenhams, allowing it to seize control of the business and install Ashley as chief executive.
Debenhams hit back, branding the tycoon’s complaints ‘self-serving’ and ‘unfounded’. It shocked investors earlier this month by admitting it will not meet profit targets of £8m. It is now expected to post losses of as much as £30m.
the warning came eight weeks after Debenhams said it was expecting to meet its target.
Ashley, who is Debenhams’ largest shareholder, has already booted ex-chairman Sir Ian Cheshire out and kicked chief executive Sergio Bucher off the board.
He has become increasingly frustrated after it snubbed Sports Direct’s offer of a £40m interest-free loan. Sports Direct said it has forwarded the letter to the Financial Conduct Authority (FCA) watchdog, expressing its concerns.
Ashley’s firm, in its letter to the board, said: ‘We believe the majority of shareholders’ best interests are being undermined by the continued misleading public statements, and cloak and dagger actions.’ Debenhams said: ‘the board has taken advice at every stage to ensure that its announcements have been consistent with the disclosure requirements. the company is seeking to execute a much-needed restructuring, in the interests of all stakeholders, while its biggest shareholder tries to undermine the process at every turn.’
Debenhams’ shares fell 5.6pc, or 0.19pc, to 3.21p. the FCA declined to comment.