Mike Ashley's Frasers Group in Debenhams rescue talks

Mike Ashley has bought other struggling businesses including House of Fraser and Evans Cycles

Mike Ashley's Frasers Group has confirmed it is working on a possible last minute rescue of Debenhams.

The department store chain is currently set to shut all its stores by the end of next March, putting 12,000 jobs at risk, after administrators failed to find a buyer for the business.

Mr Ashley has bought other struggling High Street businesses and used to be a major shareholder in Debenhams.

But Frasers said there was "no certainty" it could save the chain.

One of the biggest issues, it said, was the collapse into administration last week of another High Street giant, Arcadia, which is the biggest concession holder in Debenhams department stores.

Liquidators moved in to Debenhams' stores on Wednesday to start clearing stock after a potential rescue deal with JD Sports fell through.

• Debenhams set to close putting 12,000 jobs at risk

• What went wrong at Debenhams?

Mike Ashley, who founded Sports Direct and also owns House of Fraser, had already made an offer for Debenhams after it was initially put up for sale in April.

But this approach, thought to be in the region of £125m, was rejected as too low, leaving JD Sports as the last remaining bidder.

It is understood Mr Ashley was only interested in taking on about 30 stores out of 124.

In a statement issued on Monday, Frasers Group said that while it "hopes that a rescue package can be put in place and jobs saved, time is short and the position is further complicated by the recent administration of the Arcadia Group".

"There is no certainty that any transaction will take place, particularly if discussions cannot be concluded swiftly."

Mr Ashley has made no secret of his desire to acquire Debenhams in the past.

He built up a 29% stake in the chain, but saw his £150m holding wiped out last year when the company fell into administration and then ended up in the hands of its lenders, a consortium led by hedge fund Silverpoint.

'Final throw of the dice'

For Mike Ashley this is the final throw of the dice in his efforts to own Debenhams.

The big question now is how much will he up his offer and will it be credible enough for the administrators and ultimately Debenhams' lenders?

He's up against what sum the administrators think they can recover from liquidating the chain. Harsh as it may sound, in these situations, the priority is to secure as much value for creditors as possible as opposed to saving jobs and stores.

Mike Ashley should never be underestimated, but his is by no means a done deal. If he can clinch an 11th-hour agreement then Debenhams lives on, but ultimately the chain is likely to have far fewer stores.

Stockbroker Shore Capital said the latest bid could be Mike Ashley's "last play" on the retailer.

In a note, it said any potential rescue deal would centre on the chain's "current and future stock position" and that it was unclear how many Debenhams stores would survive given many were located near to House of Fraser shops.

"Frasers is known to be a hard negotiator and will probably walk away rather than over pay," it added.

Before Debenhams went into liquidation, the business had called in administrators twice in two years, most recently in April.

The 242-year-old retailer has struggled for years with falling profits and rising debts as more shopping moved online. But its position became untenable in the pandemic as non-essential retailers were forced to close for prolonged periods.

The firm had already trimmed its store portfolio and cut about 6,500 jobs since May as it struggled to stay afloat.