Debenhams said it had rejected a last-minute offer by Sports Direct to underwrite an equity issue of £200 million, a move that increases the likelihood that its lenders will take control of the company.

Shareholders would see their holdings wiped out if the company enters administration, including Sports Direct boss Mike Ashley.

Mr Ashley had increased the offer from £150 million, but Debenhams said the offer was deemed by its lenders as not sufficient to justify extending the April 8th deadline.

In a statement on Tuesday, Debenhams said the offer was “highly conditional”.

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Debenhams said it would continue discussions with lenders on Tuesday and expected to make a further announcement during the day.