Sports Direct tycoon Mike Ashley is thought to have lost as much as £150m from his 29.9 per cent stake in Debenhams
Sports Direct tycoon Mike Ashley suffered a humiliating defeat after his dogged attempts to take over Debenhams were knocked back – wiping out his entire investment.
The retail mogul is thought to have lost as much as £150million from his 29.9 per cent stake in Debenhams after the department store crashed into administration and was placed into the hands of its lenders.
The so-called pre-pack administration – where the outcome with the lenders was agreed before the administrators were called in – left shareholders with nothing.
‘It’s game over for Mike Ashley and Debenhams shareholders,’ said Laith Khalaf, senior analyst at Hargreaves Lansdown.
Ashley, who has pledged to save Britain’s ailing High Streets, has spent months snapping up struggling retailers and fashion brands.
He owns House of Fraser, Evans Cycles, Flannels and Agent Provocateur and has stakes in French Connection and Game Digital.
But he failed to buy HMV and Patisserie Valerie and his interest in LK Bennett also looks set to come to nothing.
Russ Mould, investment director at AJ Bell, said: ‘The Debenhams saga has been a significant distraction to Sports Direct’s management at a time when the retail sector remains very fragile.
‘The situation has been like a greedy child who wants a new toy. As soon as they get it, all they want is another toy rather than making the most of what they’ve already got.
‘Mr Ashley needs to get back to the day job and regain focus.’
Debenhams was valued at £1.7billion when it returned to the stock market in 2006 with shares priced at 195p each.
But the company had debts of £720million and was worth just £22.5million when shares were suspended at 1.83p yesterday.
The subsequent deal with Debenhams’ lenders – including UK banks and US hedge funds – rendered the shares worthless.
While Debenhams will trade as normal for the time being, it is expected to close at least 50 of its 166 stores under its new owners, putting 4,000 jobs at risk.
Ashley, 54, raised his stake in Debenhams to nearly 30 per cent in March last year and in March this year launched the first in a series of attempts to take control of the firm.
This culminated in a last ditch £200million offer in the early hours of yesterday morning.
However, his approach was rejected by lenders as they baulked at Ashley’s demands, including that he be installed as chief executive.
It triggered a furious tirade from Ashley, who said: ‘This is nothing short of a national scandal. As normal, politicians and regulators fiddled whilst Rome burnt.
‘These politicians and regulators have proven to be as effective as a chocolate teapot.’
He continued: ‘I restate my call for the advisers to go to prison given their skulduggery in undermining shareholders and other stakeholders, such as employees and pensioners.
‘Whilst these hedge funds look to close a significant number of stores and put thousands of people out of work, as politicians and regulators look on, I will go to the ends of the Earth to save as many Debenhams stores and jobs as I can, similar to the promise I made with regards to House of Fraser.
‘I call on the authorities to reverse the administration process so that a full, better and appropriate solvent solution can be found.’
The billionaire’s obsession with adding Debenhams to his sprawling retail empire had raised eyebrows.
But photos posted on social media of House of Fraser, which Ashley acquired for £90million last year, show rails full of heavily discounted Sports Direct products and messy shop floors.
Debenhams declined to comment on the developments.
Debenhams’ pensioners were last night told they will be unaffected by the retailer’s change of hands. Trustees said the pension scheme would continue to operate as normal.
According to Debenhams’ accounts, the retirement plans for staff and management are operating a surplus. A spokesman for the trustees said: ‘Members can be reassured that the schemes are carrying on as usual.
‘The trustees have worked with our specialist advisers… and we have consulted closely with The Pensions Regulator and the Pension Protection Fund at every stage. We are in the process of writing to all members with further information, and we will continue to keep them informed.’
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