Debenhams (LON:DEB) has been offered a £150 million loan by Sports Direct, latest development in the struggle for control show. In return for the interest free loan, Sports Direct has requested an additional 5% stake in the business and the appointment of Mike Ashley as Chief Executive.

Sports direct (LON:SPD), 61% owned by entrepreneur Mike Ashley, currently owns almost 30% of the struggling department store.

The department store chain announced only two days ago that it was in “advanced” talks with banks to borrow £150 million, in attempt to snatch back control from Mike Ashley. This comes after Mike Ashley moved forward with his attempts to control the department store last week.

In response to Debenhams’s bank loan announcement, it appears that Sports Direct has fired back with an offer to fund the £150 million themselves.

“Sports Direct wishes to confirm that it has made an alternative proposal to Debenhams,” a company statement published yesterday reads.

“Sports Direct would make a £150m unsecured term loan (of 12 months) to Debenhams. Of the total amount of the lending, £40m would be used to repay Debenhams’ £40m bridge facility with an attendant release of security. The remaining £110m would be available for general working capital,” the statement continues.

Sports Direct has offered an interest free loan under the conditions that if Sports Direct increases its share to 35% (by an additional 5%), it will not have to bid for the rest of the company. If its stake is not increased, then the loan would bear a 3% interest.

Regulations demand that a shareholder with a 30% or more stake in a business must make a bid for the entire group. However, this can be avoided through a “whitewash agreement” that requires approval from Debenhams’ independent shareholders. If a whitewash agreement is made, then the Sports Direct loan will be interest free.

In a final sentence, Sports Direct reveals its last request to the department store chain:

“Mr Mike Ashley would become a director and the CEO of Debenhams.”

On Thursday Debenhams issued a spate statement acknowledging the proposal.

As Debenhams continues to struggle amid a tough trading climate, will it give in to Mike Ashley’s demands and lose further control or will it continue to seek funding from banks?

Shares in Debenhams (LON:DEB) were trading at +8.1% at 08:53 GMT Thursday, whilst Sports Direct (LON:SPD) shares were up 1.2%.