Sports Direct spends £43 million on Tesco shares in put option agreement
Mike Ashley’s sports retailer Sports Direct has entered into a put option agreement with Tesco, with the hope that the struggling supermarket’s shares will rise.
The retailer reports that the agreement with Goldman Sachs International involves 23 million ordinary Tesco shares, representing a 0.28% stake in Tesco.
Tesco has faced a difficult week after suspending four execs, including its UK managing director, after an account indiscrepency.
Sports Direct will benefit greatly if Tesco shares rise, after plummeting 10% in early trading on Monday morning.
Sports Direct said its “maximum exposure” under the put option was limited to approximately £43 million.
The retailer said: “Sports Direct is required to transfer cash collateral to cover its obligations under the Put Option.
“The amount of collateral required during the life of the Put Option can increase or decrease by reference to the underlying market price of Tesco’s ordinary shares.
“After taking into account the premium it will receive, Sports Direct’s maximum exposure under the Put Option is limited to approximately £43 million. “
This was posted in Bdaily's Members' News section by Ellen Forster.