Exposed: Ashley’s tirade at bosses of Debenhams
Sports Direct tycoon secretly fires off raft of ‘bullying’ legal threats in bid to seize power
BILLIONAIRE Mike Ashley has sent senior Debenhams directors a deluge of legal letters detailing serious allegations of wrongdoing in a desperate attempt to halt the department store’s refinancing plans.
In a highly unusual move, the Sports Direct owner has bombarded staff with 25 communications in the past three weeks as he has wrestled for control of the company, The Mail on Sunday understands.
On one occasion, Debenhams received eight letters in a single day. The correspondence campaign is being seen as an attempt by Ashley to bully the beleaguered company into installing him as the chief executive and cancelling refinancing plans that would wipe out his 30 per cent shareholding.
The missives sent by lawyers and staff representing Ashley are understood to include claims sent to individual board members accusing them of misrepresenting the company’s financial situation. The letters were sent in quick succession between March 7 and March 27. Debenhams declined to comment.
Ashley stepped up his campaign again yesterday asking shareholders to sign yet another letter to complain ‘the board continue to ignore the interests of its shareholders’ and ‘take immediate steps to install Mike Ashley as CEO’. The board has insisted the door is open to constructive Ashley talks but that his demands have been so far unacceptable.
Retail market sources said Ashley has been ‘incandescent’ at various points throughout the process and last week ‘boiled over’. Ashley has repeatedly demanded to be put in charge of Debenhams and has made a series of highly conditional offers to lend the chain as much as £100million.
Last week, he said he may try to buy the business outright – but Debenhams has instead pushed ahead with plans that keep the Newcastle United football club owner on the sidelines.
His attempt to seize control erupted again on Friday when a statement released by Ashley’s firm claimed that some advisers to Debenhams belonged in prison. Earlier in the week, another director at his Sports Direct firm had accused some of those involved of ‘theft’.
Ashley is yet to explain the basis of these allegations publicly but they appear to reference a mooted rescue deal with creditors that is likely to leave shareholders with nothing.
Debenhams has been talking with creditors, landlords and other suppliers about a complex restructuring to cut its debts and future liabilities – particularly rents. It is planning to close as many as 50 of its stores which will leave it with a little over 100. The flood of correspondence prompted sources to speculate Ashley could be preparing the ground for legal action after he lost an estimated £150million following the collapse of Debenhams’ share price.
Sources said that had Ashley made overtures in a more orderly manner, he would have had an opportunity to win over opinion and force the Debenhams board to the negotiating table.
One City adviser who works with major firms said: ‘This has been the biggest test of his business approach so far – a chance to show the world how Mike Ashley operates – and, unfortunately, to a lot of people on the outside this has ended up looking terrible.
‘Never mind Debenhams shareholders, what about his own? He lost millions buying shares and now wants to take control of a business with £500 million debt and a pension fund?’ Another source said: ‘Perhaps a more traditional approach would have worked better, rather than naked aggression.’
The Mail on Sunday has made repeated efforts to contact Ashley for details on his plans for Debenhams. However, little information has been released except through increasingly bizarre stock market statements.
On Wednesday, he issued a 5p-a-share ‘possible offer’ valuing the business at just over £60million.
However, the statement was amended less than two hours later as he had referred to the store by the wrong name. But in a statement on Friday announcing a £200million refinancing package, Debenhams said: ‘The possible offer announced by Sports Direct did not provide a solution to the group’s immediate working capital needs.’
It said the company had ‘well-developed plans’ with its other creditors ‘in order to protect the interests of its broader group of stakeholders including employees, pension holders, suppliers and lenders’.