Mike Ashley suffered a £30million setback yesterday as a discount retailer he backed teetered on the brink of collapse.
Studio Retail Group suspended its shares on the London Stock Exchange and filed to appoint administrators after talks to find £25million fell through.
It had asked banks for the short-term loan to help it sell surplus stock, but said it was unable to come to an agreement so will not be able to cover its operating costs.
Own goal: Studio Retail Group, of which Sports Direct tycoon Mike Ashley (pictured) is the biggest backer, filed to appoint administrators after talks to secure £25m fell through
Studio, which was formerly known as Findel, sells clothing, homeware, toys and gifts to about 2.5m customers.
It offers flexible payment terms and is predominantly used by lower income families.
Annual sales hit £578.6million in the year to March 26, while profit was £41.7million. The administration puts up to 1,400 jobs at risk in its Accrington warehouses and head office.
Ashley is Studio’s biggest backer, having amassed a 28.9pc stake through his Frasers Group since 2015.
He attempted a full-blown takeover, at 161p per share, in 2019 but was rejected. Shares topped 300p last May but have since crashed and were suspended at 115p yesterday.
If his stake is wiped out, Ashley would lose around £30million.
It is not known what Frasers Group will do once administrators have been appointed, or whether it will seek to buy the group out of administration.
But AJ Bell financial analyst Danni Hewson said: ‘Ashley’s tactic has often been to wait until a retailer goes into administration before pouncing with a cut-price deal. He’s a shrewd operator and would rather wait until a company is on its final breath before coming in with a life-saving offer.’
The collapse of Debenhams in 2019 rendered Ashley’s 30 per cent holding, once valued at as much as £150million, worthless.
And that year when Goals Soccer Centres football pitch operator was kicked off the AIM junior stock market over an accounting scandal, his 19 per cent stake was wiped out.
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