(Bloomberg) -- Billionaire Mike Ashley’s Sports Direct International Plc accused Debenhams Plc’s board of misleading shareholders in its Jan. 10 results ahead of the department-store chain’s profit warning last week.
Sports Direct, which owns about 30 percent of Debenhams, said in a March 4 letter to the retailer’s board that its January earnings report was “at best impossibly optimistic or at worst deliberately misleading.” After Debenhams issued its fourth profit warning since early 2018 the following day, Ashley stepped up his campaign to oust the board and take over management.
Beset by Brexit woes and Britain’s desertion of shopping-street retailers, Debenhams has made a series of maneuvers to try to escape insolvency and a lowball takeover by Ashley. While the billionaire has appealed directly to shareholders, a group of Debenhams’s lenders has repeatedly rebuffed his bid to take over as chief executive officer, people familiar with the situation have said.
“We believe the majority of shareholders’ best interests are being undermined by the continued misleading public statements, and cloak and dagger actions in the refinancing process,” the letter from Sports Direct said. “We are not getting anywhere near close to the required level of interaction and response from management to help us help you.”
Debenhams was “quite clearly misleading” when it said in January that the company continues to generate cash as it’s taken a 40 million-pound ($53 million) rescue loan since then and needs further funding imminently, according to the letter.
Disclosure Requirements
Debenhams called Sports Direct’s comments “unfounded and self-serving” in a statement late Wednesday and said its announcements have been consistent with disclosure requirements.
“The company is seeking to execute a much-needed restructuring -- in the interests of all stakeholders -- while its biggest shareholder tries to undermine the process at every turn,” Debenhams said.
It’s not the first time Ashley has taken aim at the Debenhams board. He expressed ire at the chain’s former chairman last year after the company rejected his offer of a loan.
“We have dancing turkeys on the building, I’m going to put Ian Cheshire’s head on one,” Ashley said at the time. “I’m so cross with him.”
In January he successfully led the ouster of Cheshire and CEO Sergio Bucher from the board.
Ashley followed up on the March 4 letter by requesting a meeting of Debenhams shareholders to remove all current directors other than Chief Financial Officer Rachel Osborne and to put himself on the board to run the company. He is finding himself sidelined as Debenhams works with lenders to restructure its debt.
“We are very unhappy with the quality, quantity and speed of information and decision making with regards to us in this restructuring process,” the company’s letter said.
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