Sports Direct owner Mike Ashley has attacked Debenhams after the struggling department store refused to accept a £40million loan from him.
He is furious after he was forced to drastically cut the value of his near 30 per cent stake in Debenhams, wiping £150million from his fortune.
In an extraordinary outburst during a results presentation in the City, Ashley, 54, expressed his frustration after his offer was rejected – and likened Debenhams chairman Sir Ian Cheshire to a doomed Christmas turkey.
Sports Direct owner Mike Ashley is furious with Debenhams after he was forced to drastically cut the value of his near 30 per cent stake in Debenhams, wiping £150m from his fortune
Ashley said: ‘There’s no need for that business to fail and wipe out shareholder value. I find it ‘blow-your-brains-out’ stuff.
‘We have dancing turkey decorations on our building – I’m going to put Ian Cheshire’s head on one.
‘I know it sounds funny but obviously I’m very cross because it’s unnecessary and not right.’ The billionaire, who also owns Newcastle United football club, proposed the interest-free loan in exchange for an additional 10 per cent stake in Debenhams.
When the offer was turned down, he sent an outraged letter to Debenhams chief executive Sergio Bucher, warning: ‘The company has a zero chance for survival. There isn’t any good news out there.
‘In this context, I can’t see how our headline proposal to provide a £40million interest-free loan and inject some additional equity could possibly be seen or portrayed as a negative.
‘I am really concerned that the board doesn’t really seem to appreciate the position that Debenhams is in and their responsibility to shareholders.’
Debenhams lost almost £500million in the year to September – the biggest full-year loss in its 240 years. Its shares have dived by more than 84 per cent so far this year, valuing it at just £67million.
The chain is said to view Ashley’s offer as an attempt to destabilise it, and said: ‘We welcome Sports Direct’s proposal as a clear demonstration of their willingness to support the company.
‘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.’
And he attacks House of Fraser bosses too
Mike Ashley has accused House of Fraser’s previous management of running the company while it was insolvent.
He made the claim as he revealed Sports Direct’s £90million purchase of House of Fraser had caused half-year profits to slump by more than a quarter.
He said: ‘I have made my views clear that I believe the previous House of Fraser senior management team traded the business whilst it was insolvent for a long time.
This means we have significant challenges ahead in turning House of Fraser around.’
House of Fraser was previously owned by Chinese conglomerate Sanpower.
Ashley is thought to be considering a takeover of Debenhams to add to his growing empire.
Sports Direct bought cycling outlet Evans for £8million in October, and has major holdings in French Connection and Game Digital. Ashley claimed in the letter – first reported by the Daily Telegraph – to be offering a helping hand.
He wrote: ‘We don’t want Debenhams to fail. It’s not in our interests but without something changing rapidly all of the shareholders risk getting wiped out.’
It came as Sports Direct’s profits in the 26 weeks to October 28 tumbled to £64.4million, a 26.8 per cent drop compared with a year earlier.
Earnings took a hit following its £90million purchase of House of Fraser. Revenues grew 4.5 per cent to £1.8billion but Ashley said of November: ‘It was unbelievably bad.’
Sports Direct shares fell 14.8 per cent, or 40.9p, to 235.4p. Debenhams fell 4.9 per cent, or 0.28p, to 5.45p.