Billionaire swoops to seize Debenhams
THE bitter battle over the future of Debenhams has taken a dramatic new twist with Mike Ashley launching a last- ditch attempt to put himself in charge.
The billionaire wants the company to scrap plans for a ‘pre-pack’ insolvency due to be announced on Tuesday which would see the closure of up to 50 stores.
The directors want to cut the company’s £720 million debt amid the gloom engulfing high street stores.
But Mr Ashley, who owns nearly 30 per cent of Debenhams, is angry that a rapid decline in the firm’s share price has left him nursing estimated losses of £150 million. The 54-year-old fears that if the company’s plan proceeds then his shares will become worthless. Now he wants to become chief executive with immediate effect.
Last month he made a string of legal threats to Debenhams directors and released a statement to say its advisers belong in ‘prison’. He made a £ 61 million conditional offer to buy Debenhams last month but he has so far failed to stump up the cash. In a letter to the board this weekend, Mr Ashley said the company should raise £150 million by selling shares to new investors, asking lenders to cancel debts up to a similar amount and converting £122 million of the remaining debt into a further tranche of new shares. He believes t hat would l eave ‘ Debs’ with a more manageable £300 million of debt. But his plan is subject to ‘adverse changes clauses’, which could mean any unforseen clrcumstances would let him pull the plug on his rescue plan at a moment’s notice.
The board will have to make a decision on Mr Ashley’s proposal in the next 48 hours.
So far, they have insisted poor decisions and expensive lease contracts signed by former management had left them with no other options but to walk away from some of the company’s giant stores and slash its huge rent bills.
The board’s plan would see Debenhams continue trading as normal until Christmas and stores would begin to shut in January 2020. Debenhams, which employs more than 20,000 staff, has more than 160 stores in Britain.
Mr Ashley already owns a string of chains including Sports Direct, House of Fraser and fashion shops Flannels and USC. He also owns Newcastle United Football Club.
One retail industry source said: ‘The question for the board and the lenders is whether they trust Mike Ashley enough to hand him the keys to the business and put in charge of this complicated plan at such a delicate time.’
Debenhams declined to comment.