Sports Direct's Mike Ashley calls on Debenhams executives to take lie…


() owner Mike Ashley has proposed ‘s () top executives take a lie detector test, accusing them of  “a sustained programme of falsehoods and denials”.

Ashley, who owns 29% in Debenhams through Sports Direct, also called for the department store chain’s shares to be suspended and asked industry regulators to investigate how the company is being run.

He made the remarks in a public statement on Sunday night, alongside an offer to underwrite a £150mln rights issue that would reduce the retailer’s debt burden, so long has he was appointed chief executive.

READ: Sports Direct’s Mike Ashley accelerates calls to become Debenhams boss after receiving ultimatum

Debenhams is yet to respond to the proposal but was expected to issue a statement on Monday.

Ashley has already been battling to become chief executive of Debenhams in a bid to avoid a debt refinancing that would hand control of the business to lenders.

In March, Debenhams agreed a £200mln refinancing with lenders, but only half was available immediately. The other half would be released depending on whether Sports Direct launched a firm takeover offer or agreed the provision of at least £200mln in new funds via a loan or participation in a rights issue.

Ashley has been hesitant to launch a full takeover bid, which would lead to a change of control clauses for Debenhams’ bank and bond debt and require him to refinance more than £500mln of borrowing.

If Debenhams turns down Ashley’s £150mln lifeline, the business is likely to enter administration this week.

Lie detector test

Sports Direct said Ashley and two colleagues had attended a meeting with Terry Duddy and David from Debenhams board “where it is considered misrepresentations were made to induce Sports Direct into signing a non-disclosure agreement locking them out of any ability to trade in the bonds or equity of Debenhams for a period of time”.

The sportswear retailer said Ashley and his two team members had undertaken lie detector tests to prove their recollections of the meeting were accurate. The results “showed without any doubt” that they were providing an accurate report of the meeting, Sport Direct said.

“Indeed Mike Ashley’s score for example was so significantly high as to be considered rare in comparison to others,” the group said.

Sports Direct called on Duddy and to also take lie detector tests.

Debenhams to maintain a ‘dignified silence’ 

A representative for Debenhams and the board members told the Financial Times they intended to maintain a “dignified silence” in response to the claims.

A source told the newspaper that discussions between Debenhams and Ashley were already fraught because of a “yawning trust gap” between the two parties.

The person said Debehams board was worried Ashely would back out of the £150mln lifeline if he gained full control of the company.

Creditors, which include both European institutions and US-based hedge funds such as Silverpoint Capital, would need to approve the rights issue if Debenhams accepts the proposal.

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