26th Feb 2016 07:46
LONDON (Alliance News) - Sports Direct International PLC on Friday said it will stop drawing down from its loan facility with Mike Ashley/Mash Holdings Ltd due to criticism it has received about related-party transactions and instead will solely use its revolving credit facility, which was recently increased to GBP788 million.
Under the terms of the revolving credit facility, the interest rate payable by the group increases if it is more than one third drawn, a third being GBP263 million, but Sports Direct said it expects its borrowing requirements to consistently exceed the GBP263 million level in the coming months.
The sportswear and sporting goods retailer said that previously when it has required borrowing in excess of that amount, it has utilised its GBP250 million loan facility with Mike Ashley/Mash Holdings, which has an interest rate 50% lower than under the revolving credit facility and does not attract arrangement or commitment fees. Mike Ashley is the founder and executive deputy chairman of Sports Direct.
However, Sports Direct said it will not draw down from the MALF in the foreseeable future, which will lead to an increase in the overall cost of borrowing, due to criticism it has received over related-party transactions.
"It has been decided that it is in the best interests of the group and its shareholders to avoid further criticism at this time," Sports Direct said in a statement.
By Karolina Kaminska; [email protected] @KarolinaAllNews
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