Sports Direct wishes to confirm that it continues to seek to constructively engage with the Debenhams board and, as one of a number of potential options under consideration, it has made a proposal to Debenhams under which Sports Direct would underwrite a £150 million pre-emptive equity issuance to existing Debenhams shareholders (the "Equity Issuance").
Pre-pack administration is typically a court-based process which can allow creditors to take control in a pre-agreed plan while the company continues to operate as normal.
"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.
"Ashley accused the Debenhams bosses of acting out a "sustained programme of falsehoods and denials" in their attempts to keep him out of their boardroom and executive bathrooms, adding that ".misrepresentations were made to induce Sports Direct into signing a non-disclosure agreement, locking them out of any ability to trade in the bonds or equity of Debenhams".
Debenhams declined to comment on the statement.
Debenhams' rejection means it is likely to go into administration this week.
Debenhams has been at the centre of an increasingly bitter move by Sports Direct chief Mike Ashley to take over as CEO.
"Ashley becoming CEO is a major sticking point for the lenders; there is a major trust deficit here", the source said, declining to be named because the talks are private.
On Sunday night the billionaire called for the retail chain's board to be investigated and trading in its shares to be suspended.
The Newcastle United owner made the now-rejected offer on Friday, saying it would form part of a "comprehensive refinancing" of Debenhams and would be contingent on the retailer's lenders agreeing to write off £148 million of debt.
FILE PHOTO: FILE PHOTO: Mike Ashley, founder and majority shareholder of sportswear retailer Sports Direct, leads journalists on a factory tour after the company's AGM, at the company's headquarters in Shirebrook, Britain, September 7, 2016.
In recent years he has pounced on other weak retailers, including department store chain House of Fraser, and analysts have speculated that he could put the two together and could also use Debenhams' excess store space to sell brands he already owns.
"Sports Direct remains keen to be a supportive shareholder and financier".