The tug of war for control of Debenhams took another twist this morning after Sports Direct tabled a 5p a share offer for the remainder of the shares it doesn’t already own. The offer is conditional on Mike Ashley becoming CEO, and the company not filing for a CVA and not seeking new alternative funding arrangements.

The new bid would cost Sports Direct at £61.4m and would be a 127% premium on the most recent closing price. It would only be £20m more than his initial loan offer of £40m made a few months ago.

At the beginning of this month Debenhams management reported yet another profits warning while also suggesting that they may have to look at company voluntary arrangement, or a refinancing package that is likely to wipe out shareholders giving control to its lenders.

This week it has been reported that Debenhams may be on the verge of securing a £200m refinancing deal, however it would be at the expense of a debt for equity swap which would probably wipe out shareholders and result in a much more drastic store closure plan.

Recent trading has been disappointing with overall sales down 5.3% for the 6 month period to March.

On-line sales were a bright spot, but even here the company is failing to rip up any trees, showing a rise of 2% over the same period, which is pretty feeble.

The attempts to restructure the business have been going in since the end of Q3 last year, with a tug of war going on between Debenhams management and their largest shareholder, Sports Direct.

While Mike Ashley’s attempts to take over Debenhams can be construed as an attempt to preserve the value of his stake in the business, which isn’t an unreasonable position to take, the fact is if he gets it wrong he’ll end up losing more than his initial stake.

This would appear to suggest that Debenhams management reluctance to engage is driven more by personality than in any sense an attempt to safeguard existing shareholder interest.

Whatever the choices the stakes remain high with numerous store closes likely to result, whichever way it goes, which means that the eventual victims in this tug of war will still be the staff on the shop floor.

Debenhams management might also want to consider that before turning Mike Ashley away.

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