House of Fraser in crisis talks in bid to avert thousands of job losses
Troubled store chain hopes for closure deal to avoid ‘calamitous’ administration
Houseoffraser(hof)islocked in last-ditch talks with its lenders as the retailer scrambles to avoid a calamitous administration that would put thousands of jobs at risk.
The chain, which has four department stores in Scotland including Jenners in Edinburgh, hopes to launch a store closure programme next week, but sources have said the company is drawing up drastic contingency plans for an administration. Hof’s collapse would endanger 17,000 staff across its 59 UK stores.
The group is racing to secure £70 million in fresh funding through a proposed rescue plan.
However, if the money does not materialise, it could file a notice to appoint administrators within days, one source said.
HOF is holding crisis talks with HSBC and the Industrial and Commercial Bank of China over the weekend, after the lenders expressed concern about the business’ bid to secure the money from a new investor. The lenders, advised by EY, are demanding assurances that Hamleys owner C.banner will follow through on a promise of new funding when it takes a majority stake in the business.
C.banner has pledged the cash injection on the condition that the retailer pushes through a sweeping store closure programme via a company voluntary agreement (CVA).
However, the store closures scheme would require approval from Hof’s landlords, who have not been supportive of the CVA.
HOF has been holding talks with landlords in a desperate bid to secure their approval, fearing they could vote against the CVA.
It needs 75 per cent of creditors to back the plan, and has also been seeking the approval of the Pensions Regulator. It is thought that about 20 House of Fraser stores could close if the CVA goes ahead.
An HOF spokesman said: “Constructive engagement continues between all parties.”