Struggling department store Debenhams (LON:DEB) has confirmed that it is in “advanced” talks with banks to borrow £150 million in order to snatch back control from Mike Ashley.
£40 million of the sum would refinance a £40 million bridging loan. The loan was secured last month in a wider recovery attempt that aims to assist trading though the Easter period.
The fund also aims to ensure that credit insurers restore cover for the department store’s suppliers, as well as enabling the business to restructure its store portfolio, according to the Guardian.
This drive for control comes after Mike Ashley, the Sports Direct boss (LON:SPD), moved forward with attempts to control the department store last week. Sports Direct owns almost 30% of Debenhams.
In an attempt to add to his empire, Mike Ashley said he wanted to eject all but one of the department store’s directors in addition to appointing himself as chief executive.
In a stock market announcement on Thursday, the Sports Direct Boss said that he would step down from his Sports Direct position if appointed to the Debenhams’s board.
Mike Ashley’s move comes just a few days after Debenhams announced a new profit warning, where it warned that it was no longer on track to deliver results in line with market expectations.
“Taken together with macroeconomic uncertainties and increased financing costs as a result of additional working capital needs, this means that the group’s statement made on 10 January that we were ‘on track to deliver current year profits in line with market expectations’ is no longer valid,” Debenhams said.
Debenhams has been struggling amid a tough trading climate that has hit the UK high street.
Securing the £150 million fund is a fundamental move for the retailer as Mike Ashley seeks to oust the majority of its board.
At 08:55 GMT Monday, shares in Sports Direct International plc (LON:SPD) were trading at -0.15%.
Shares in Debenhams (LON:DEB) were trading at +0.74% as of 08:58 GMT Monday.