House of Fraser gets extension to loan ahead of store closures vote

HOUSE of Fraser has secured significant breathing space from its lenders ahead of a crunch vote on store closures that will likely lead to the loss of 6,000 jobs.

Following discussions with HSBC and Industrial and Commercial Bank of China, the troubled department store has conditionally agreed an extension to a £125m term loan and a £100m revolving credit facility, sources told the Press Association.

It is thought the extension of the loan will give House of Fraser more than a year to restructure and improve its trading performance. The loans will now fall due in the fourth quarter of 2020.

However, lenders will only grant the extension if landlords approve House of Fraser’s restructuring plan, known as a Company Voluntary Agreement (CVA).

The loan extension is also conditional on House of Fraser receiving £70m from Hamleys owner C.Banner, which is buying a 51% stake in the business and injecting new capital.

Landlords have publicly hit out at the CVA, complaining that they are being forced to stomach a financial hit at the same time as House of Fraser enjoys new investment.

The CVA will lead to the closure of 31 stores, including both stores in Wales, with rent cuts on a further 10, if it is approved by 75% of House of Fraser’s unsecured creditors.

Advisers to House of Fraser and the business’ lenders have been contingency planning for a full administration of the business, should its CVA fail.

This would trigger a sale process for the business. Sports Direct chief Mike Ashley, who owns 11% of House of Fraser, is widely tipped to make a swoop on the department store.