House of Fraser survival in doubt as rescue plan falls apart
The future of House of Fraser has been thrown into doubt after the Chinese fashion group that had planned to purchase a controlling stake in the company walked away from the deal.
C Banner, a Chinese fashion group who also owns the toy store Hamley’s had planned to take control of the struggling department store and inject £70 million into the business.
However, they were forced to withdraw after the Hong Kong-listed company’s share price dropped by 70 per cent over a two month period and a profit warning was issued on Wednesday.
In a statement to the Hong Kong stock exchange, they described any decision to proceed with the deal as “impracticable and inadvisable” and the agreement was therefore terminated immediately.
The clock is now ticking for House of Fraser, which employs about 5,000 staff, and is heavily indebted with heavy interest payments every quarter.
On top of that, there are a number of big bills on the horizon, including quarterly rent and the payment of Christmas stock.
Richard Lim of Retail Economics said: “This is a real blow to House of Fraser. They’re in desperate need of a rescue deal and without this fresh injection of around £70m, it’s almost inevitable that they’ll fall into administration. This could be within a matter of weeks.”
The department store chain is now understood to be talking to new potential buyers with talks between themselves and Sports Direct founder, Mike Ashley, who already controls an 11.1 per cent stake in House of Fraser.