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Sports Direct increases stake in Debenhams to 12.7 percent

By Vivian Hendriksz

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Sports Direct continues to increase its stake in struggling department store group Debenhams, as the sportswear company has taken control of thousands more shares.

“Sports Direct continues to work together with Debenhams and looks forward to building a long-term relationship,” said the sportswear retailer in a statement.

The sportswear retailer has increased its total interest in the group from 11.2 percent to 12.7 percent, after it sold a 4.6 percent stake it acquire last month in exchange for a put option agreement which gives Sports Direct direct sway over 6.1 percent of the group.

Through the put option agreement, Sports Direct has the right to purchase 74.1 million shares at a fixed price in the future. The financial arrangement, which is effectively a gamble on Debenhams shares increasing in value, potentially could cost Sport Direct a maximum of 46 million pounds.

According to the terms of the put option, if Debenhams shares drop below the agreed set price, Sports Direct has the choice of either acquiring ordinary shares in Debenhams at the exercise price or paying the cash settlement value of the put option.

This move follows in the footsteps of Sports Directs agreement this January, when the retailer acquired a 4.6 percent stake and then sold it a week later when it entered a put option arrangement over a 6.6 percent stake in Debenhams.

Debenhams
Sports Direct