House of Fraser in last-ditch rescue talks

House of Fraser was in frantic talks on Thursday with potential investors who might be willing to throw the stricken department store chain a financial lifeline and enable it to stave off collapse.

The 169-year-old company’s future was thrown into turmoil on Wednesday when C banner International, the Hong Kong-listed shore retailer, jettisoned plans to take a majority stake and inject £70m of capital after a collapse in its own share price.

Mike Ashley, chief executive of Sports Direct, which owns 11 per cent of House of Fraser; Alteri Investors, the London-based turnround specialist; and Philip Day, the Dubai-based retail entrepreneur, have all been involved in the talks and are submitting proposals, according to two people close to the situation.

Hilco Capital, the London-based group which bought music chain HMV out of administration in 2013, is also waiting in the wings but is thought to be interested in only a small portion of the business.

None of the companies, nor Rothschild, which has been hired by House of Fraser to work on an accelerated sales process, would comment.

Mr Day, a British billionaire has scooped up other venerable, but ailing, high street names in recent years, including menswear group Austin Reed and Jaeger, the upmarket women’s fashion chain.

The brands are owned by Mr Day’s Edinburgh Woollen Mill Group, which also includes Jane Norman and Peacocks, the value fashion chain that was bought out of administration in 2012.

James Rossiter, head of JDR Consultants and an adviser in corporate restructuring, said: “Most interested parties now are likely to be waiting for House of Fraser to fall into administration to pick off the pieces.”

House of Fraser needs cash for its next quarterly rental payment of £25m in September. Its 2020 senior secured bond has halved in value since the start of the week.

The group has been badly hit by a drop in visits to departments stores as more people buy brands online and it is weighed down by onerous property commitments.

C banner agreed to buy a controlling stake from Nanjing Xinjiekou Department Store, House of Fraser’s Chinese owner on condition that it complete a company voluntary agreement to give protection from creditors while reorganising the business.

House of Fraser’s CVA, which was due to have been completed last week and involves closing 31 of its 59 stores, has been held up by a legal challenge.

A group of landlords filed the challenge, arguing that their interests had been “disproportionately affected during this CVA process”.

House of Fraser said on Thursday that it intended to “robustly defend its position” when the hearing is held on August 14.


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