Mike Ashley warns Debenhams faces collapse without £40m cash injection
© ARCHANT NORFOLK 2009
Mike Ashley has claimed Debenhams is on the brink of collapse as he urged the struggling retailer to accept his offer of a £40m loan to avoid a Christmas disaster.
Shares in Debenhams dropped more than 3% on Wednesday after a letter from Mr Ashley to the retailer’s boss Sergio Bucher emerged in which he claimed speculation points towards the company having “zero chance of survival”.
In the letter, first seen by The Daily Telegraph, Mr Ashley goes on to urge Mr Bucher to accept a £40m interest-free loan from Sports Direct, which is its largest shareholder.
He also warned that Debenhams faces collapse without urgent action.
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, never mind diluted.”
Debenhams released a statement saying it would not accept the offer as it could affect other shareholders.
“We welcome Sports Direct’s proposal as a clear demonstration of their willingness to support the company,” a representative said.
“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.”
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The correspondence emerged as Mr Ashley told investors that trading in November this year was the worst on record and said retailers are likely to be pushed over the edge. “It will literally smash them to pieces,” he said.
Figures released earlier this week showed footfall to high streets and shopping centres suffered the worst November decline since the recession.