Debenhams Plc asked bondholders to approve further lending from its secured creditors, rebuffing attempts by billionaire Mike Ashley to provide his own money to the struggling retailer.
The U.K. department store chain started a process on Friday to get bondholder approval for as much as 200 million pounds ($262 million) of new lending from a group of existing lenders, according to a statement. The company needs bondholders’ consent to access the new money and seeks to secure it by 5 p.m. on March 28.
Sports Direct produced its own proposal later on Friday to buy the company’s Magasin du Nord stores in Denmark to assist with Debenhams’ short-term liquidity needs. Under the plan Debenhams would have a 12-month option to buy back the Danish stores at the same price and Ashley would become director and chief executive officer at Debenhams.
Debenhams has been drawn into a tug of war between a group of hedge fund and bank creditors and its biggest shareholder, Ashley’s Sports Direct International Plc. Both parties had offered the company at least 150 million pounds of fresh money to keep it afloat. They are vying for control of the retailer as it seeks to restructure about 560 million pounds of debt.
The company said the new money will allow it to pursue restructuring options, some of which would result in no equity value for current shareholders. Debenhams shares fell as much as 62 percent to 1.1 pence.
Sports Direct has called for a shareholder vote “as soon as possible” in which Ashley seeks to appoint himself to the board and remove all current members other than Chief Financial Officer Rachel Osborne. In the meantime, creditors are seeking to push through their own restructuring plan for the retailer.
