Debenhams turns down Sports Direct loan offer

Britain’s Sports Direct has offered a 40 million-pound ($51 million) loan to Debenhams , the struggling department store group in which it holds a near 30 percent stake, according to a letter from Mike Ashley published by the Daily Telegraph.

Debenhams, which confirmed the letter was authentic, said it had declined the offer.

“We welcome Sports Direct’s proposal as a clear demonstration of their willingness to support the company,” a Debenhams spokeswoman said on Thursday.

“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.”

Ashley, who has a majority stake in Sports Direct, said he was not surprised by Debenhams turning down his offer, given that the group had never supported any assistance from its biggest shareholder, but he was concerned the board did not appreciate the position it was in.

“November was the worst November for retailers in living memory,” he said in the letter.

“There isn’t any good news out there. In this context, I can’t see how our headline proposal to provide a 40 million pound interest-free loan and inject some additional equity could possibly be seen or portrayed as a negative in any shape or form.”

Debenhams said in October it would close up to 50 of its underperforming stores, putting about 4,000 jobs at risk, after it reported a record full-year loss of nearly 500 million pounds.