Sports Direct share price dips as group faces increase in borrowing costs
Sports Direct’s (LON:SPD) share price has slid today as the sportswear giant revealed that it was facing an increase in its borrowing costs after deciding it will no longer use a loan facility provided at favourable rates by its billionaire founder Mike Ashley.
The facility was recently increased to a capacity of £788 million and under its terms the interest rate payable increases if more than a third is drawn down. Previously, when Sports Direct required borrowing in excess of this amount it utilised a £250 million loan facility with Ashley, as the rate of interest payable was about 50 percent lower than that payable on the revolving credit facility and did not attract any further fees.
Sports Direct said in a statement this morning that it had been subject to “unjustified criticism” over the loan facility including “incorrect press coverage” about its benefits. “It has been decided that it is in the best interests of the group and its shareholders to avoid further criticism at this time,” the group said. “Accordingly the group will not draw down from the (loan facility) in the foreseeable future, which will lead to an increase in the overall cost of borrowing,” it added. In the coming months Sports Direct expects its borrowing requirements to be consistently in excess of £263 million.
By 09:47 GMT, Sports Direct’s share price had fallen 2.95 percent to 387.60p. Meanwhile, the FTSE 100 had climbed 1.35 percent to stand at 6,093.89 points.
As of 09:57 GMT, Friday, 26 February, Sports Direct International Plc share price is 387.45p.
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