Fresh fears for House of Fraser as deal pulled
The future of troubled retail chain House of Fraser was thrown into fresh doubt yesterday when the potential new owner pulled its investment into the chain.
The company – which has four Scottish outlets including Jenners in Edinburgh – had already announced the closure of 31 stores, resulting in an estimated 6,000 job losses.
House of Fraser’s future is in doubt after C.banner, the Chinese owner of Hamleys, pulled its investment in the troubled retail chain.
C.banner was planning to buy a 51 percent stake in house of Fraser and plough £70 million into the ailing business, but has said it is scrapping the deal because its share price has fallen dramatically.
The high street chain had been able to keep some of its outlets afloat, including iconic Edinburgh department store Jenners, under plans by C.banner to invest in the business.
But C.banner released a statement yesterday confirming the company no longer intends to go ahead with plans to buy a 51 per cent stake in House of Fraser.
Three Scottish stores remain open – Jenners which has been on Princes Street in Edinburgh since 1838 and one each in
Glasgow and at Loch Lomond – but face closure if the company goes into administration.
The company had already announced in June the closure
of 31 of its existing 59 stores, resulting in an estimated 6,000 job losses. If a new investor cannot be found, the company would have to go into administration and almost certainly close the remainder of its stores.
House of Fraser said: “House of Fraser is in discussions with alternative investors and is exploring options to obtain the required investment on the same timetable. Discussions are ongoing and a further announcement will be made as and when appropriate.”
C.banner’s investment was conditional upon House of Fraser, which employs more than 17,000 people, closing more than half its stores through a Company Voluntary Arrangement (CVA).
However, the store closure programme was thrown off course when landlords issued a legal challenge, saying they were unfairly prejudiced by the process.
House of Fraser has previously described the restructuring proposal and investment from C.banner as the last viable option for the business, raising the prospect that it could now fall into administration.
Retail tycoon Mike Ashley, the founder and chief executive of Sports Direct, has reportedly offered House of Fraser a £50 million loan in recent weeks. However, it is understood that Mr Ashley is not involved in the current talks with House of Fraser. Other retailers undertaking CVAS in a bid to keep trading include New Look, Mothercare and Carpetright.
House of Fraser’s collapse would mean major job losses for the retail sector, which has already been hit by a string of high-profile administrations from the likes of Toys R Us, Maplin, and Poundworld.