28th Oct 2019 16:28
(Alliance News) - Sports Direct International PLC on Monday issued a letter to Rachel Reeves, MP and chair of the Business Energy & Industrial Strategy Select Committee, calling for an investigation into the collapse of retailer Debenhams PLC.
In particular, the sportswear retailer criticised the Select Committee's comments made in regards to the collapse of Thomas Cook, in which Reeves said that none of the former travel firm's management took responsibility for its failure and was "passing the buck".
Sports Direct said it took issue that despite supplying documents on what had gone wrong with Debenhams earlier in 2019, no action had been taken since.
The group said that although the Thomas Cook situation was similar, the Debenhams scenario was "far worse".
"The 'loan to own' scheme that had been devised by the US based hedge fund Silver Point Capital was actually planned, designed and executed in conjunction with their professional advisers to take control of the company from the existing shareholders leaving them with nothing, this includes small independent shareholders for whom the money lost was material and life changing," Sports Direct said in the letter.
"Despite those facts no one in Parliament seems to be sufficiently interested about the Debenhams failure. No one seems to be doing anything about it," the group added.
In April, Sports Direct's 29% stake in the retailer was wiped out after Debenhams itself had appointed administrators to sell the company to a newly-incorporated entity controlled by Debenhams lenders, unlocking GBP200 million of financing.
Sports Direct at the time was bidding to acquire Debenhams, by underwriting a GBP150 million equity issue to existing Debenhams shareholders.
There had been a legal challenge made against the rescue deal, by commercial landlords funded by Sport Direct Chief Executive Mike Ashley, however a UK court in September ruled that the deal was legal.
"We have corporate failures of equal or worse malfeasance than Thomas Cook but because they won't attract the same brownie points they are not interested. This is the second time I have told you that you must do something. We want you, Rachel Reeves MP, to prove us wrong by properly investigating the likes of Debenhams and holding the wrongdoers to account as you appear to be doing in the Thomas Cook case," Sports Direct concluded in its letter.
Shares in Sports Direct were up 1.5% at 315.20 pence on Monday in London.
By Dayo Laniyan; [email protected]
Copyright 2019 Alliance News Limited. All Rights Reserved.
Related Shares:
Sports Direct