House of Fraser has 10 days to secure rescue

Department stores must secure funds by Aug 20 or face defaulting on bills, with up to 17,000 jobs lost

House of Fraser has admitted that is has just 10 days to save 17,000 jobs as the retailer scrambles to secure a lifeline before its cash runs dry. The stricken department store chain must find fresh funding by August 20 or risk collapse through a failure to pay its bills. The deadline outlined by the retailer is when a number of suppliers must be paid.

HOUSE of Fraser has admitted to having just 10 days to save 17,000 jobs as the retailer scrambles to secure a lifeline before its cash runs dry.

The stricken department store chain must pull in fresh funding by August 20 or risk collapse through a failure to pay its bills.

The deadline outlined by the retailer is when a number of suppliers must be paid, including a raft of in-store concessions. It was revealed in a statement to the Luxembourg Stock Exchange, where its bonds are listed, underscoring how little time bosses have left to save the business.

House of Fraser is in talks with “interested investors” and creditors in an attempt to land a last-ditch rescue deal.

It said it was focused on concluding the talks “as quickly as possible to enable receipt of an investment required by no later than August 20 2018”.

At least four suitors – including Sports Direct founder Mike Ashley, the billionaire owner of the Edinburgh Woollen Mill, Philip Day and two turnaround group, Alteri and Endless – submitted bids ahead of last night’s deadline, according to the Financial Times. Both retail tycoons have bought struggling retailers out of administration in the past. An announcement is expected today, although the timing could change.

However, Mr Ashley, who owns 11pc of the company, is said to have cooled his interest amid concerns over House of Fraser’s defined benefit pensions funds. The sales process has been led by investment bank Rothschild and has also attracted interest from turnaround fund Alteri Investors.

Hopes of a solvent sale of the 169-year-old chain were handed a boost on Sunday when it settled a legal row with landlords over its plans to restructure the business.

The landlord group, represented by restructuring firm Begbies Traynor and property agency JLL, had alleged “unfair prejudice” and “material irregularities” in how the company voluntary arrangement (CVA) – a form of insolvency deal – had been implemented. Ending the dispute has meant the retailer can slash costs by closing 31 of its 59 stores, making a rescue bid more likely.

The Daily Telegraph previously reported that accountancy giant EY has been put on standby to handle the collapse should a credible rescue fail to materialise.

The frantic search for a backer comes after Hamleys owner C.banner called time on a planned £70m lifeline.

The Chinese shoe retailer had intended to raise the money via a placing on the Hong Kong stock exchange, but abandoned the plan after a sharp fall in its share price.

C.banner is run by Chen Yixi, brother-in-law of Yuan Yafei, the Chinese billionaire whose Sanpower Group currently owns House of Fraser. Sanpower bought the chain four years ago for nearly £500m.

The turmoil engulfing House of Fraser has caused the price of its bonds to hit an all-time low of just 29p in the pound, sinking 59pc since the beginning of the month. The sharp fall suggests that debt investors hold little hope of being repaid.

The retailer has suffered a series of credit rating downgrades and was forced to make last-minute extensions to its bonds and loans to prevent a “liquidity crisis”.

It comes as bitter trading conditions on the high street force a slew of retailers to restructure their businesses.

Analysis by The Daily Telegraph has estimated that 1,334 shops have been shut or earmarked for closure since January, putting 23,400 jobs at risk.

Maplin, Toys R Us and Poundworld have already collapsed, while Mothercare, Carpetright and New Look are all using CVAS to close stores.