"Mr Ashley's appointment would immediately relieve any pressure on the company's supply chain and he would be in a position to lead the restructuring of the company's stores and operations", BBC quoted Sports Direct as telling Debenhams in a letter. Debenhams' shares plunged 10.3 per cent, or 0.21p, to 1.83p last night as lenders, including United States hedge fund Silver Point Capital, prepared to seize control.
If Ashley wants to be in with a chance of taking over Debenhams following an administration, he will need to make an offer approaching £800m to account for the retailer's debt and pension deficit.
If the remaining funds are released, Debenhams will be taken over by lenders, wiping out shareholders including Sports Direct.
Ashley's company said it also continues to "give active consideration" to the option of buying department store chain Debenhams for cash at 5p per ordinary share. It has until April 22 to decide whether to do so.
Yesterday the tussle between the two retailers took a weird turn as Ashley continued to fight to stop the department store from entering into a pre-pack administration.
The maverick billionaire called on Sunday night for the board of the struggling high street chain to be investigated, two members to undergo lie detector tests, and trading in its shares to be suspended.
Mike Ashley, boss of Sports Direct and potential owner of half the rest of the high street, is veering into bonkers territory in his current battle to acquire retail giant Debenhams.
Mr Ashley has a near-30% stake in the department store but faces wipeout if it presses ahead with a £200 million refinancing plan announced in March.
Laith Khalaf, senior analyst at Hargreaves Lansdown, fears lenders won't back Ashley's latest bid, saying the conditions are too costly.
"Sports Direct is disappointed with Debenhams' response", the company said.
If a rescue deal is not reached then lenders will close 50 Debenhams stores, which could happen with weeks.
However, a source familiar with the situation said that there is a lack of trust between the two sides, with Debenhams fearing that Ashley could renege on his investment offer after he takes control.
"The difficulty is that as part of its recent refinancing, Debenhams has already agreed to terms which means lenders approach any negotiations from a position of strength", he said. Debenhams' lenders have also repeatedly rebuffed Mr Ashley's attempts to be named CEO.