Sports Direct Intl Plc (LON:SPD) refers to the announcement of Debenhams plcregarding Sports Direct’s proposal in respect of the potential acquisition of Magasin Du Nord.
Sports Direct wishes to confirm that an offer that it believes represents in excess of fair value and addresses Debenhams’ immediate liquidity concerns was made to the board of Debenhams for Magasin. Sports Direct notes that it did not receive a response to its invitation to Debenhams to provide further details of its valuation should Debenhams believe Magasin to be worth more than the £100m offered. The offer for Magasin is one of several offers that Sports Direct has made to provide the board of Debenhams with a valid alternative to its apparent view that that multiple insolvency processes are required to address Debenhams’ current liquidity concerns and to facilitate a wider balance sheet restructuring.
Sports Direct’s representatives and advisors have participated in discussions with Debenhams’ advisory group. However, it cannot be said that the board of Debenhams has actively engaged in these discussions or are open to any form of alternative proposal from any third party. This lack of engagement and the related limited access to information has made it very difficult for Sports Direct to present a proposal that addresses Debenhams’ funding and restructuring requirements beyond the immediate liquidity need. In any event, Sports Direct believes that as a result of the entry into of Debenhams’ recent financing arrangements, the outcome of any negotiation with a party other than Debenhams’ current lenders may be not be within the board’s control.
Regarding the guidance provided to Sports Direct on behalf of the Debenhams board, if guidance as to what might represent a workable solution for Debenhams could result in no equity value for Debenhams’ current shareholders, from Sports Direct’s perspective and that of Debenhams’ wider stakeholders, that is not a workable solution.
Sports Direct does not consider House of Fraser to be a competitor of Debenhams. In any event, were Mr Ashley to become CEO of Debenhams he would, as previously announced, step down from his roles at Sports Direct. He would also be subject to fiduciary duties to Debenhams. Sports Direct would strongly recommend that the Debenhams board reconsiders the offers made by Sports Direct to date and their own duties as directors of Debenhams.