Sports Direct has piled further pressure on Debenhams by urging its shareholders to revolt against a £200m funding lifeline.
The Mike Ashley-controlled sportswear giant said it has been contacted “by a number” of other Debenhams shareholders, “expressing their support for the appointment of Mr Mike Ashley as Debenhams CEO”.
And it has called on other disgruntled shareholders to send letters to the ailing department store chain to rebel against its refinancing plans.
Last month, Debenhams revealed it had secured £200m in new loans from existing lenders.
It said the lifeline would “provide liquidity headroom” to the business and “deliver stability for its customers, staff, suppliers and pensionholders”.
But it warned that, although the cash injection would give it the “ability to pursue restructuring options to secure the future of the business”, “certain of these options” would “result in no equity value for the company’s current shareholders”.
Sports Direct owns almost 30% of Debenhams and is battling to prevent its shareholding from being wiped out by the refinancing measures.
According to The Mail on Sunday, Ashley has sent Debenhams a raft of legal letters detailing serious allegations of wrongdoing in a last-ditch effort to block its refinancing plans.
Ashley is said to have bombarded staff with 25 letters over the past three weeks – including eight in one day.
The letters sent by lawyers representing Ashley are understood to include claims sent to individual board members accusing them of misrepresenting Debenhams’ financial situation.
Last week, Sports Direct urged fellow shareholders to send letters of their own to Debenhams – and even included a template letter for them to sign.
The letter read: “As a concerned shareholder in Debenhams plc, I have watched with increasing concern the board continue to ignore the interests of its shareholders as it has sought new banking facilities from its existing lenders and Noteholders.
“In particular, I was gravely concerned by your statement on 22 March 2019 where you acknowledged that under your current course of action, there was an increasing possibility that the entire equity value for the Company’s current shareholders would be wiped out.
“I am therefore writing to demand that the Debenhams board takes immediate steps to install Mike Ashley as CEO, as clearly there is no time to wait for a General Meeting to be called in order for this to be effected by shareholders.”