Tuesday 26 March 2019 7:41 am | Updated: Monday 03 June 2019 1:13 am

Debenhams shares soar as Mike Ashley’s Sports Direct considers offer

Debenhams has doubled down on its major restructuring strategy this morning, saying that it will continue with its plan to obtain funding hours after Sports Direct revealed it was mulling a bid for the embattled department store chain.

Last night Mike Ashley’s sportswear firm said that it was weighing up an offer for the firm “alongside other options”.

It said the bid would likely be in cash, but reserved the right to vary the form of its offer.

Debenhams' shares soared 41 per cent as the stock market opened this morning, leaving the embattled department store chain's share price at 2.18p.

However, this morning Debenhams said that “any public offer, an offer for the company would not, in itself, address Debenhams’ immediate funding requirement”.

“Therefore, the company will continue with its plan to obtain the funding required, as outlined in Debenhams’ statement of 22 March 2019,” it said.

The retail tycoon’s move yesterday evening is the latest in a series of attempts to take control of the major retail chain, which has so far rejected all of Ashley’s offers.

Those include a £150m loan as well as a £100m offer for the company’s Danish business Magasin du Nord that would have put Ashley in the driving seat.

Laith Khalaf, senior analyst at Hargreaves Lansdown, said Debenhams’ stubborn rejection of Ashley’s other approaches means tabling a bid “may now be his last resort”.

“Ashley’s in a race against the clock however,” he added, “because Debenhams is in the process of refinancing its debt, which will give its creditors even greater control of the company.

“He needs to come out with an offer pretty quickly, along with a plan to meet Debenhams’ immediate funding needs. It would be nice to think a longer term strategy for the business might be forthcoming too.”

On Friday Debenhams announced it was seeking £200m of additional funds from lenders to allow it to implement a restructuring plan, and that some options would wipe out shareholders.

In the statement Sports Direct, which holds a 29 per cent stake in Debenhams, hit out at the firm’s restructuring plan, saying it would have a negative impact on shareholders.

Debenhams' shares have been “behaving like a kangaroo in a trampoline park”, Khalaf added, with the retailer's departure from the FTSE All Share meaning liquidity is very limited.