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Mike Ashley slams Debenhams for rejecting his £40m loan

Retail tycoon Mike Ashley has launched a scathing attack on Debenhams today, claiming that the beleaguered department store giant has rejected a £40m interest-free emergency loan.

In a letter addressed to Debenhams boss Sergio Bucher, the billionaire Sports Direct owner suggests that without the money the company "has zero chance of survival".

Ashley, who controls a 30 per cent stake in the high street chain, expressed concerns that "the board doesn’t really seem to appreciate the position that Debenhams is currently in and their responsibility to shareholders", adding that last month had been the "worst November for retailers in living memory".

In a letter first revealed by The Daily Telegraph earlier today, Ashley urged the department store chain to accept a £40m interest-free loan and "some additional equity" from Sports Direct.

Ashley then asked Bucher to reconsider the offer and respond by lunchtime tomorrow.

In a statement Debenhams said it welcomed 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," Debenhams said, adding that it had invited Sports Direct to engage with its "broader refinancing process".

Such remarks follow on from reports in recent months that Ashley was mulling the idea of buying out Debenhams, which has seen its share price plummet in the last 12 months after announcing a series of profit warnings and store closures.

Like many high street retailers, Debenhams has suffered from lower footfall on the high street and higher fixed costs. 

In July Ashley also accused Debenhams of ignoring his advice after the retailer left a major dent in Sports Direct’s annual profits.

The news comes on the same day as Sports Direct has posted a 27 per cent drop in half-year profits, as costs from the acquisition of fellow beleaguered department store chain House of Fraser weighed on the group’s balance books.

Ashley said today that his company is facing "significant challenges" in its attempts to save House of Fraser, which he bought out for £90m in August.

Underlying profit before tax dived 26.8 per cent to £64.4m in the half-year to October, while net debt climbed to £505.5m, compared with £471.7m in the same period last year.