Mike Ashley’s Frasers Group’s application for a coronavirus loan has been rejected, it admitted today, as it finally settled a €674m (£588m) Belgian tax bill.
Frasers Group (formerly Sports Direct) saw it application for a government bridging loan denied, sending shares down 2.4 per cent.
The Covid Corporate Financing Facility (CCFF) scheme is open to larger firms seeking liquidity to survive coronavirus.
The Treasury and Bank of England buy up short-term debt to shore up the balances of firms in “sound financial health prior to the shock”.
The rejection came as Frasers Group said it has settled its unpaid Belgian tax bill for an “immaterial amount”.
The revelation of the disputed bill forced Ashley’s firm to delay its results last summer and saw its long-time auditor depart.
Frasers said today it has settled the unpaid tax bill given uncertainty over coronavirus. It also said it has reached a commercial settlement that will not see it pay tax or penalties in Belgium.
Ashley seeks to shore up banking credit
“Frasers Group has taken the commercial decision to settle these matters now given the uncertainty is affecting Frasers Group’s banking lines and its suppliers’ credit insurance,” billionaire Ashley’s company said.
“Due to store closures as a result of the current Covid-19 crisis, Frasers Group understands the majority of new credit insurance cover has been withdrawn for the time being. Frasers Group would also note that it has currently not been accepted as eligible for the Covid Corporate Financing Facility (CCFF).”
Ashley’s business at first sought to stay open during the coronavirus lockdown by claiming staff had essential worker status, like employees of supermarkets and pharmacies.
At first the firm said its Sports Direct and Evans Cycles stores were vital to the nation’s health.
Frasers Group later backtracked on the claim and said it would obey the lockdown measures to remain closed.
Ashley later said: “Our communications to our employees and the public… was poor.”
Sports Direct also came under fire tfor reportedly hiking the price of some pieces of equipment by as much as 50 per cent amid the outbreak.
Frasers Group’s Belgian tax dispute resolved
Frasers Group initially resolved a significant amount of the Belgian tax bill dispute in January, when it said Belgian authorities had then withdrawn the claim. Today marks the close of a controversial chapter in Ashley’s company’s history.
The massive bill first came to light in Sports Direct’s annual financial results, released in July, and prompted long-time auditor Grant Thornton to resign.
It took two months for Ashley to find a new auditor – outside the Big Four – in RSM.
The Belgian tax bill also forced Ashley to delay the publication of those annual results from an initial date of 15 July to 11 days later.