Mike Ashley offers new deal to troubled House of Fraser

and MIKE ASHLEY has offered to buy a majority stake in House of Fraser, putting forward what he considers “better terms” than those offered by Hamleys owner C.banner, which last week revealed it was delaying its deal.

Mr Ashley, the founder of Sports Direct, wrote a letter to House of Fraser’s finance advisers around four weeks ago to lay out his offer, sources with knowledge of the matter said.

He has since been in talks with the advisers, although those discussions have not yet progressed any further. Sports Direct holds an 11.1pc stake in House of Fraser, as well as a 27.5pc stake in rival retailer Debenhams. House of Fraser declined to comment.

News of Mr Ashley’s approach to House of Fraser’s advisers, which was first reported by Sky News, comes as the department store company grapples with an uncertain future.

House of Fraser is facing a battle to stay solvent until the autumn after C.banner last week put on hold a deal to pump in £70m of new capital in return for a 51pc stake.

The delay meant House of Fraser had to seek court approval for changes to its banking arrangements, which S&P said yesterday were “tantamount to a default” on some agreements. This prompted the credit rating agency to cut House of Fraser from CCC+ to selective default (SD), making it even harder for the company to borrow money.

S&P said the company had asked to extend the maturities on its bonds and banking facilities to October 2020, in exchange for a fee of 1pc of the outstanding debt.

Without making the changes, House of Fraser “would have likely faced a liquidity crisis on, or immediately after, July 29”, when interest and £26.1m of debt repayments were due.

The credit rating agency added: “In light of this liquidity pressure, as well as the company’s weak performance over the past year and its ongoing operational restructuring, we consider the schemes a distressed exchange transaction and therefore akin to a default.”

The Chinese shoe retailer C.banner had agreed to provide a cash injection by the summer in return for the stake in House of Fraser, if it underwent a sweeping restructuring. However, a company voluntary arrangement, which would have seen the chain close more than half its stores, has been put on hold after it was hit with a legal challenge by a group of landlords.