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Mike Ashley rebuffed over £40m loan offer to Debenhams

Sky News logo Sky News 13/12/2018 John-Paul Ford Rojas, business reporter

a man wearing a suit and tie: Mike Ashley said he was 'extremely frustrated' by the response © Other Mike Ashley said he was 'extremely frustrated' by the response

Mike Ashley has been rebuffed by Debenhams after he offered a £40m loan to bail out the struggling department store amid speculation it had "zero chance of survival".

In a letter to Debenhams chief executive Sergio Bucher, Mr Ashley said he was making the offer at a "critical time" after the high street was hit by what he called "the worst November in living memory".

Mr Ashley, whose Sports Direct business already owns a 30% stake in Debenhams, said he was "extremely frustrated" at his offer being rejected.

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He said the Debenhams board "doesn't really seem to appreciate the position that Debenhams is currently in and their responsibility to shareholders".

Shares in Sports Direct fell 13% while Debenhams slipped 4%.

Related: The biggest casualties of the UK's continuing high street crisis (Lovemoney)

Details of the letter, first reported by the Daily Telegraph, emerged as Sports Direct reported a 27% fall in half-year profits as it counted the cost of rescuing another department store chain, House of Fraser, this summer.

Mr Ashley told investors that some retailers were likely to be pushed over the edge after the gloomy trading conditions seen last month.

"It will literally smash them to pieces," he said.

Debenhams said: "We welcome Sports Direct's proposal as a clear demonstration of their willingness to support the company.

© Getty

"However, as the offer came with conditions that could affect the interests of other stakeholders, while the board does not think it could accept the proposal, as presented, it has invited Sports Direct to engage as part of our broader refinancing process."

In his letter to Mr Bucher, Mr Ashley pointed to speculation about Debenhams' difficulties with suppliers and credit insurance and that "additionally it is speculated that the company currently has zero chance of survival".

"What we are offering is a very public statement of support at a critical time for the Debenhams business," he wrote.

"If I'm sounding extremely frustrated - well I am. We've seen this before, with Blacks and HoF.

"They didn't want any help either. We don't want to see Debenhams fail.

"It's not in our interest to see it fail but without something changing rapidly all of the shareholders risk getting wiped out."

a person walking down the street in front of a building: Debenhams recently reported the biggest annual loss in its history © Getty Debenhams recently reported the biggest annual loss in its history

Debenhams reported a £492m annual loss in October - the biggest in its history - as it outlined plans to close up to 50 stores and take "decisive action" to secure its future.

Mr Ashley earlier this month told Sky News that House of Fraser - the company he bought out of administration for £90m over the summer - could be merged or "should at least work very closely together" with Debenhams.

Half-year results for Sports Direct published on Thursday showed underlying pre-tax profits for the six months to 28 October fell to £64m compared to £88m a year ago.

The results showed that the House of Fraser business had notched up a loss of £31.5m since the takeover in August while Sports Direct had also injected £70m into its supply chain.


Mr Ashley said there were "significant challenges ahead" in turning around its fortunes.


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