Administrators take Mike Ashley's stake

Oct 28 2009 by Iain Laing, The Journal

NEWCASTLE United owner Mike Ashley's retail company Sports Direct has lost its 29% stake in outdoor chain Blacks Leisure after administrators of failed Icelandic bank Kaupthing Singer & Friedlander (KSF) took control of the holding.

The announcement by Blacks Leisure comes after JD Sports Fashion said this week that Sports Direct’s 11% stake in it had also passed to KSF.

Sports Direct, owner of the Sports World chain, had fought a legal battle with administrators over the stakes, which were partly financed by the bank. It has already taken a £53.1m hit in its annual results over the shares after conceding that it did not control the shares for accounting purposes.

Sports Direct has reined in its policy of “strategic investment” since recession struck, although it believes the stakes can be beneficial “in the right circumstances”.

The company’s stake-building is competing for cash with other priorities, such as cutting debts, which stood at £431m as of the end of April. The stake in Blacks Leisure is worth around £3.6m at current prices.

Ashley reportedly made an approach to buy the entire business earlier this year and in 2007 threatened to remove the company’s board over plans to sell the its Freespirit boardwear business.

Blacks is struggling to secure its financial future after warning it would breach its lending terms after a sudden trading downturn.

The firm agreed a £40m facility with Lloyds in July but has embarked on a restructuring of the business. The group – which operates 256 Millets shops and 116 Blacks Outdoor outlets – also warned that 50 roles at its head office in Northampton were likely to go and announced plans to close 89 stores.