Struggling department store chain Debenhams said shareholders could lose their entire investment as a result of some of the restructuring options it is considering.

The 200-year-old retailer said it is trying to refinance its debt, restructure its estate after a series of profit warnings and seek a cash injection of up to £200 million (A$373.1 million) from existing lenders at it tries to fend off a bid by Sports Direct’s Mike Ashley.

Ashley had offered a £150 million loan to Debenhams, but as part of the deal, he would have to be in charge of the chain.

The department store retailer said certain restructuring options “would result in no equity value for the company’s current shareholders”.

Lenders have until this Thursday to approve Debenhams’ cash call, which it says will allow it to restructure.

The company had warned its shareholders that some of their restructuring options could see their investment wiped out.

Last Friday, Debenhams posted an announcement on the London Stock Exchange, confirming that it has received a proposal from Sports Direct International in connection with a proposed acquisition of Magasin du Nord, conditional upon Mike Ashley being appointed as the CEO of Debenhams.

“This proposal comes without any commitment to participate in the wider financing solution,” Debenhams said.

The department store chain said the board has responded to Sports Direct directly, that, as with all other proposals received to date from Sports Direct, it does not address the company’s funding and restructuring requirement, while balancing the interests of all stakeholders.

“Magasin is a key part of the Debenhams group, is cash flow generative and a meaningful contributor to group profits,” Debenhams said. “As such, Magasin is an important part of any lending proposition and therefore any broader solution that protects value for the group.”

“Further, there are obvious concerns with the proposal that Mike Ashley becomes CEO of Debenhams given that Sports Direct owns our direct competitor House of Fraser.”

Debenhams said the board has remained open to engagement with Sports Direct throughout its refinancing process and has provided clear guidance on what would represent workable solutions that would allow Sports Direct to participate while also protecting the interests of other stakeholders.

But, according to Debenhams, this guidance has been repeatedly ignored by Sports Direct.  

Debenhams said it continues to make progress with its refinancing and restructuring discussions with existing lenders, noteholders and other stakeholders.

“The board remains open to constructive involvement from Sports Direct and other stakeholders in this process.”

Magasin du Nord has been put up for sale by Debenhams last year and Sports Direct offered to purchase the business . Under the proposal, Debenhams would have a 12-month option to buy it back at the price it was sold.

Debenhams would also have the right to continue to market the business, gaining the benefit from any uplift above the initial sale consideration were it sold to a third party in that 12 month period.

In connection with the above, it is proposed that Ashley would become a director and the CEO of Debenhams to assist Debenhams through its restructuring process.