Debenhams bites back as Sports Direct unveils new coup

8th Mar 2019 07:29

(Sharecast News) - Debenhams said it was "disappointed" after Sports Direct called an extraordinary shareholder meeting to remove all but one of the current board and to appoint the sports chain's founder Mike Ashley as its new boss.Sports Direct, which owns the House of Fraser department store chain and has a near-30% stake in troubled rival Debenhams, said that if enough other shareholders support its plan, then Ashley would step down from his current roles as a director of Sports Direct to focus on turning Debenhams around. He would be replaced as acting chief executive at Sports Direct by Chris Wootton, currently the deputy chief financial officer.On Friday Debenhams confirmed that it had been contacted and that any shareholder with more than a 5% stake has the right to call a shareholder meeting. It did not say when the meeting would be."The board has been engaging with Sports Direct and our other stakeholders regarding options to restructure our balance sheet and is disappointed that Sports Direct has taken this action," the statement read. "In the meantime, discussions to address our future funding requirements are well advanced."Debenhams has raised concerns with the Competition & Markets Authority about the potential concentration of control in the hands of Ashley, the Guardian reported later, noting that House of Fraser stocks 90% of the rival department store group's beauty offering, with both stores stocking the same fashion brands.Debenhams, which has seen its shares lose more than 90% of their value of the past four years to value the business below £50m, had £520m tied up in loans and bonds, with net debt of £286m as of 5 January. It is thought to be looking at a debt-for-equity swap, alongside the closure of 50 stores.Ashley's latest attempt at a coup comes weeks after he ambushed the Debenhams board at its annual general meeting in January, with a surprise coordinated manoeuvre that saw the removal of chairman Ian Cheshire and the demotion from the board of chief executive Sergio Bucher.He was supported in that vote by fellow 7% shareholder Milestone Resources, the vehicle of Dubai-based mogul Micky Jagtiani.