Published: Wed, April 10, 2019
Markets | By Erika Turner

Mike Ashley 'wants Debenhams execs to take lie detector tests'

Mike Ashley 'wants Debenhams execs to take lie detector tests'

He tabled a last-minute rescue package on Friday, which still depends on him being made chief executive.

On Monday Sports Direct said it would underwrite a 150 million pound rights issue at Debenhams in exchange for the CEO role for Ashley and the agreement of lenders to write off 148 million pounds of debt.

Debenhams has been contacted for comment.

However if Mr Ashley's proposals continue to be rebuffed the retail giant is likely to go into administration by the end of this week, with lenders seizing control.

The sports store chain said the underwriting of the equity issuance, which would see Sports Direct take on the financial risk involved in selling new equity to current shareholders to raise funds, would form "part of a comprehensive refinancing of Debenhams". Despite almost £3bn of sales past year, the business is now worth less than £30m as its share price has crashed to less than 2p.

The business has until 5pm on 22 April 2019 to announce either a firm intention to make an offer for Debenhams or that it does not intend to.

However, a source familiar with the situation said that there is a lack of trust between the two sides, with Debenhams fearing that Ashley could renege on his investment offer after he takes control.

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The so-called pre-pack administration - where the outcome is agreed before administrators are called in - means investors with shares in Debenhams will be wiped out.

The department store has stipulated four conditions it would require Mr Ashley to fulfil for it to consider asking lenders to extend its refinancing deadline on Monday.

The Newcastle United owner claimed he had taken a lie detector test to prove he was telling the truth about the details of a disputed meeting with the retailer.

Mr Ashley is said to have called for the board to be investigated, for two members undergo lie detector tests and trading in shares to be suspended.

In recent years he has pounced on other weak retailers, including department store chain House of Fraser, and analysts have speculated that he could put the two together and could also use Debenhams' excess store space to sell brands he already owns.

"In theory, a deal could be struck, but relations seem far from cordial and the Debenhams management look set on giving the lenders control", he said.

Mike Ashley, founder and majority shareholder of sportwear retailer Sports Direct, arrives at the company's AGM, at the company's headquarters in Shirebrook, Britain, September 7, 2016.

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