House of Fraser calls in administrators
Struggling department store chain House of Fraser has called in administrators after talks to save the business failed.
In a statement this morning, the company said discussions with interested investors and its main creditors had “not concluded in a solvent solution”.
Nevertheless, the company said “significant” progress has been made towards completing a sale of the business and that administrators Ernst & Young will continue the discussions with a view to concluding a transaction shortly after their appointment.
According to Sky News, Sports Direct’s Mike Ashley is on the brink of concluding a deal to buy the chain.
Meanwhile, House of Fraser stores will continue trading as usual while the administrators work to complete a sale.
Chinese retail group C.Banner said in May that it planned to buy a 51% stake in House of Fraser and introduce new capital, but this was conditional on the department store reducing its store portfolio through a Company Voluntary Arrangement. House of Fraser then earmarked 31 of its 59 stores for closure.
However, C.Banner walked away from the deal last week after a drop in its share price meant its plans to raise funds to invest in House of Fraser were rendered “impracticable and inadvisable”.
House of Fraser employs 17,000 people across the UK.
In today’s statement, Alex Williamson, chief executive of House of Fraser, said: “We are hopeful that the current negotiations will shortly be concluded. An acquisition of the 169-year old retail business will see House of Fraser regain stability, certainty and financial strength.
“In the two weeks since the Cenbest and C.Banner transaction ceased, the directors have brought forward a number of potential buyers and the group’s financial advisors have run a comprehensive M&A process to identify and then develop other third party interest that has culminated in the senior secured creditors leading negotiations with parties at a critical pace.”
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