The Sports Direct founder has taken a dim view to the prospect of having his shares wiped out during restructuring.
Sports Direct’s Mike Ashley has lashed out after Debenhams bondholders cleared the way for a restructuring which could see shareholders’ stakes wiped out. Mike, who owns almost 30% of Debenhams, is vying to take control of the struggling department store chain. He wants to install himself as boss and take control in exchange for providing Debenhams with a much-needed loan.
But on Thursday, a majority of the chain’s bondholders voted to change the terms of some of their bonds, moving Debenhams closer to a £200m refinancing.
“Now the results of the vote are known… I think that if there were any justice in the world the majority of the advisors would be put in prison,” Mike commented.
Shares in Debenhams, which had surged on Wednesday after Debenhams said noted that Sports Direct was considering a £61.4m takeover offer, were down more than 25% at about 2p per share at the close of the markets on Thursday.
Debenhams is expected to continue to favour either a debt-for-equity swap or a pre-pack administration – an insolvency procedure in which a firm arranges to sell its assets to a buyer before appointing administrators to facilitate the sale. Both options would lead to existing investors losing their holdings in the company.
Sports Direct is the biggest Debenhams shareholder, with a 29.7% stake. Brandes Investment Partners, Odey Asset Management and retail conglomerate Landmark Group are also significant shareholders.
A company voluntary arrangement (CVA) to speed up store closures and rent reductions could also be part of the plans, or come at a later stage.