LONDON, United Kingdom — Billionaire Mike Ashley made a fresh bid to stave off a looming debt restructuring at Debenhams Plc that would wipe out his equity, offering to underwrite the issuance of £150 million ($196 million) in new shares.
The chief executive of Sports Direct International Plc said his support for the shareholder rights issue is conditional on him being named chief executive of the department store chain. It’s one of a number of options being considered, Ashley said in a statement Monday.
Debenhams shares, which have fallen almost 90 percent over the past 12 months, bounced back as much as 23 percent early Monday in London.
Lenders are locked in a battle with Ashley as Debenhams seeks to restructure about £720 million of debt. The struggling UK retailer is preparing a so-called prepackaged administration under which shareholders — including Sports Direct with a roughly 30 percent stake — would lose their investments. The deadline for those talks is Monday evening.
Ashley has previously offered Debenhams £150 million in an interest-free loan, which the company snubbed, preferring a new financing package from creditors. The billionaire has also said he’s considering an offer for the company’s equity that would value it at about £61 million.
The latest proposal from Ashley would be subject to Debenhams creditors agreeing to write off £148 million in debt, Sports Direct said. It said it’s also still considering a cash offer for the retailer.
By Eric Pfanner; editors: Eric Pfanner and John J. Edwards III.
