House of Fraser to appoint administrators after investment talks fail

House of Fraser store sign. House of Fraser has settled a legal challenge from landlords over plans to close 31 of its 59 stores next year. PRESS ASSOCIATION

House of Fraser store sign. House of Fraser has settled a legal challenge from landlords over plans to close 31 of its 59 stores next year. PRESS ASSOCIATION

Mike Ashley's retail group has picked up the stricken department store business just hours after it was put into administration, in a deal that sees it take over the group's full estate of 59 stores.

However, a rescue deal by a well-capitalised business like Sports Direct will at least preserve a significant number of jobs at HoF.

The Sports Direct chief added: "This is a massive step forward and further enhances our strategy of elevation across the group".

House of Fraser's £175 million of floating-rate notes due September 2020 were quoted at a bid price of 20 pence on the pound, according to BNP Paribas prices on Bloomberg.

The intervention follows an announcement by House of Fraser that it had been forced to appoint administrators after talks with potential investors collapsed.

The tycoon beat off competition from retail rival Philip Day, the billionaire owner of Edinburgh Woollen Mill.

"I'm hopeful that both House of Fraser and Jenners will stay open, but we need to be looking at all of the shops too". It is vital that we restore the right level of ongoing relationships with the luxury brands.

However, accountancy giant EY, which was overseeing the process, opted for Mr Ashley's offer.

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Alan Hudson, Hunter Kelly, Colin Dempster and Craig Lewis from EY's restructuring team were appointed this morning as joint administrators of the group which is one of the UK's premium fashion, home and beauty retailer with 59 department stores across the United Kingdom and Ireland.

The billionaire has also built up stakes in rivals such as Debenhams, Goals Soccer Centres and French Connection.

In a statement to the Luxembourg Stock Exchange the department store said administrators had confirmed that the business would continue trading, including all stores and offices, while they attempted to complete a sale.

Mr Ashley was one of at least four parties squaring off to rescue House of Fraser after China's C.banner International Holdings Ltd shelved plans to buy a majority stake.

Two months ago, the company announced that the Worcester store was to close in 2019 with the loss of 149 jobs.

It is unclear what the status of the CVA is following the takeover.

Like other retailers, House of Fraser has been stung by soaring costs and falling consumer spending power.

The Unite union said despite a media storm over the treatment of staff at Sports Direct's Shirebrook warehouse, wages remained at a minimum and employment conditions were "threadbare". Over the past year, there's been a raft of store closures, administrations and CVAs being announced, which in part, has been blamed on the increasing online and social media retail space.

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