Sports Direct will no longer draw down from Mike Ashley loan facility

26th Feb 2016 12:37

(ShareCast News) - Sports Direct International said on Friday that it will no longer draw down from a £250m loan facility with founder Mike Ashley/Mash holdings following criticism over related party transactions.The company said it will only use its revolving credit facility from now on, which was recently increased to £788m.Under the terms of the facility, the interest rate payable by Sports Direct increases if it is more than one third drawn.Sports Direct said that previously, when it has required borrowing in excess of this amount, it has utilised the loan facility with Ashley, as the rate of interest payable was around 50% lower than that on the RCF and did not attract arrangement fees or commitment fees.It said using the facility in this way had been of significant benefit to the group, saving it over £1m over time."The group, however, has been subject to unjustified criticism over related party transactions, including incorrect press coverage of the benefits of the MALF. It has been decided that it is in the best interests of the group and its shareholders to avoid further criticism at this time," the company said.Sports Direct, which expects its borrowing requirements to be consistently in excess of the £263m level, said not drawing down from the £250m loan facility will lead to an increase in the overall cost of borrowing.At 0813 GMT, Sports Direct shares were down 1.1% to 395p.