BrightHouse owner Vision Capital could be left with just a 3% stake in the retailer as part of a £220m restructuring of the embattled business.

A consortium of bondholders is on the cusp of gaining control of the rent-to-own chain, with Sky News reporting a deal could be done this week.

Under the terms of the proposed deal, Vision Capital’s stake in the firm would nosedive.

The consortium of investors want to exchange around half of BrightHouse’s existing £220m debt for equity, while the remaining debt would remain on the retailer’s balance sheet.

BrightHouse’s largest bondholder, Alteri Investors, is understood to have reached an agreement in principle with other major lenders, including HSBC, Oceanwood Capital Management and Highbridge Capital Management.

As previously reported, BrightHouse had drafted in advisers from Rothschild to kickstart a formal sale process by approaching potential bidders.

However, it is thought they have been unable to drum up enough interest from prospective buyers, paving the way for bondholders to gain control of the business.

BrightHouse has been through a turbulent period of trading. In June, it revealed that EBITDA before exceptional items slumped 79.1% to £11.7m in its 2016/17 financial year.

The retailer, which allows shoppers to pay for goods in weekly instalments with annual interest rates of up to 99.9%, said new regulations surrounding its business model impacted earnings.

The introduction of more detailed assessments of income and expenditure negatively impacted customer sign-ups, sparking a decline in the number of customers signing contracts.

Revenues across the year fell 13.6% to £320.1m as a result.

Last month, BrightHouse was ordered to reimburse customers with almost £15m in compensation following a two-year investigation by the Financial Conduct Authority (FCA).

BrightHouse is contacting 213,000 past and current customers to explain what they are owed, after the FCA ruled it failed to act as a “responsible lender”.