Wed, 15th Aug 2018
House of Fraser has been approached by Sports Direct founder Mike Ashley, who is offering the company a fresh investment deal. Sports Direct already owns an 11.1% stake in House of Fraser, which is currently struggling, and has plans to close 31 out of its 59 stores, as a part of a rescue deal.
House of Fraser needs an injection of £50 million in order to save it from collapse, however the department store insists that it will survive its current difficulties.
The department store chain has previously said that it does not have any short-term funding issues, and that the restructuring will help to stabilise the chain. Creditors have backed its restructuring, however a group of landlords has decided to take the company to court over the plan, saying that the cut to rents is unfair to them. The chain is currently waiting for an investment worth £70 million from C.banner, who are planning to take a majority stake in House of Fraser after the store closures and rescue plan have been agreed.
Mike Ashley made his approach four weeks ago, before landlords challenged the rescue deal that the retailers had put forward. He reportedly told House of Fraser’s Advisers that he could ‘offer something better’ than the proposal from C.banner.
House of Fraser has signed a company voluntary agreement, which is something that an increasing number of struggling retailers are using to close stores. Landlords, however, argue that CVAs are being abused by companies looking to slash rents, and that the arrangements are not fair to them.