Sports Direct considering cash bid for Debenhams | Calamatta Cuschieri

Today’s article gives an overview of the Maltese, European and U.S. markets on Tuesday, and potential deal of Debenhams with Sports Direct

Sports Direct International plc is the United Kingdom's largest sports-goods retailer and operates roughly 670 stores worldwide
Sports Direct International plc is the United Kingdom's largest sports-goods retailer and operates roughly 670 stores worldwide

The Maltese market closed in the green on Tuesday, with MSE Equity Total Return Index ending the session 0.039% higher, to 9,514.342 points. Top and only gainer was Mapfre Middlesea plc adding 0.85% to close at 2.36. Malta International Airport plc, PG plc, BMIT Technologies plc, Simonds Farsons Cisk plc, HSBC Bank Malta plc and Bank of Valletta plc were active but close unchanged.

European shares rose on Tuesday, snapping a four-day losing streak, boosted by healthcare stocks and on indications that UK Prime Minister Theresa May’s deal to exit the European Union could gain some support. The pan-European STOXX 600 index added to early gains and rose 0.8%, followed by Germany’s DAX and London’s FTSE which close 0.6% and 0.26% higher.

U.S. stocks closed higher Tuesday as the energy and financial sectors buoyed the market. The Dow Jones Industrial Average rose 0.6%, to 25,657.73. The S&P 500 index advanced 0.7%, to 2,818.46. The Nasdaq Composite climbed 0.7%, to 7,691.52.

Sports Direct is considering a cash bid for Debenhams in its latest attempt to prevent a financial rescue plan that could wipe out its stake in the ailing department store.

Sports Direct, which owns nearly 30% of Debenhams, said it would seek to run the department store chain “for the benefit of all of Debenhams’ stakeholders rather than for the benefit of Debenhams’ existing lenders”. The potential bid comes after Debenhams confirmed plans to raise up to £200m in new money in a rescue package that could wipe out shareholders including Sports Direct. The company and its lenders are planning either a debt-for-equity swap with existing lenders or a pre-pack administration as it battles for survival. Debenhams, which has 165 stores and employs 25,000 people, is facing cashflow problems as suppliers demand upfront payments amid uncertainty over its future, and has £520m of long-term debt, which must be refinanced by next year.

The group previously offered a loan of £150m and to buy Debenhams’ Danish chain, Magasin du Nord, for at least £100m. Ashley has also called a shareholder meeting at which he wants to oust all but one of Debenhams’ directors and install himself as chief executive. Ashley’s efforts to seize Debenhams are complicated by the terms of some of its loans and bonds, which would enable lenders to push the company into administration if there were a change of control. Owning all the shares would still not give him control of that debt, and it is understood that Sports Direct has looked at paying back the bondholders directly.

Mike Ashley’s retail group said it was contemplating making the offer “alongside other options”. It said the offer, for which it gave no indication of value, was likely to be in cash but it reserved the right to vary the form and mix.

 

This article was issued by Nadiia Grech, Junior Trader at Calamatta Cuschieri. For more information visit, www.cc.com.mt. The information, view and opinions provided in this article are being provided solely for educational and informational purposes and should not be construed as investment advice, advice concerning particular investments or investment decisions, or tax or legal advice. Calamatta Cuschieri Investment Services Ltd has not verified and consequently neither warrants the accuracy nor the veracity of any information, views or opinions appearing on this website.

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