Sports Direct accuses Debenhams of 'deliberately misleading' the market

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LONDON, March 14 (Reuters) - Debenhams will consider a 150 million pound ($199 million) loan offer from dissident shareholder Sports Direct, it said on Thursday while indicating that Mike Ashley's latest push for control of the struggling British department store group is unlikely to fly.

Sport Direct owns almost 30 percent of Debenhams.

Sports Direct said £40mln of the unsecured loan would be used to repay the bridge facility that Debenhams agreed with its lenders last month.

The letter provides an insight into the toxic relationship that has developed between the two sides, revealing that Sports Direct reported Debenhams to the UK Listing Authority and the financial services regulator after being given a preview of the planned profit warning.

Debenhams added that any third party loan offer on these terms would "require both the consent of our RCF lenders and noteholders and material amendments to existing facilities".

In a letter that was sent to the department store chain after it was notified of the plans for a profits warning on the 5th of March, Sports Direct slammed the board of Debenhams for changing its view only a few weeks after publishing a statement announcing that the firm was "on track to deliver current-year profits in line with market expectations".

"Nevertheless, the board will give careful consideration to the proposal and will engage with Sports Direct and other stakeholders regarding its feasibility in the interests of all parties", it said.

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Debenhams said in a statement on Wednesday: "We reject these unfounded and self-serving complaints". Sports Direct's proposed 5 percent extra stake in Debenhams would increasse its shareholding to around 35 percent.

It is the latest move in Mr Ashley's high street shopping spree. If it could not increase its stake, Sports Direct said, its loan would come with 3% interest charges.

Sports Direct said the retailer's January trading update was "at best impossibly optimistic or at worst deliberately misleading".

Sports Direct wants to appoint Mr Ashley to run Debenhams.

The company responded with the letter, which accused Debenhams of being "misleading" by stating in January that it continued "to generate cash", despite ongoing discussions to refinance the business.

Earlier this week Debenhams confirmed it is in advanced talks to borrow £150 million as part of efforts to stay afloat.

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