House of Fraser on the lookout for eleventh hour salvation after C.Banner walks away

British fashion retailer House of Fraser has seen its future compromised after Chinese investment firm C.Banner walked away from a rescue deal that included acquiring a majority stake in the apparel chain as well as a 70 million pounds cash injection.

C.Banner was thought to have planned to take control of the struggling department store chain and raise 70 million pounds by issuing new shares. However, House of Fraser’s stock plummeting more than 70 percent over the past months didn’t help the retailer’s case.

Chinese investment firm deems House of Fraser’s agreement “impracticable and inadvisable”

In a statement to the Hong Kong stock exchange, C.Banner said the share placing had been "rendered impracticable and inadvisable" and the agreement was therefore being terminated immediately.

The Hong Kong-listed company issued a profit warning on Wednesday, fuelling concerns about its survival.

It’s worth recalling that in order to alleviate its piling debt, House of Fraser agreed a controversial restructuring deal with its landlords in June. The agreement, part of the retailer’s restructuring plan, included the closure of several underperforming stores, reducing the company’s commercial network from 59 to 28 stores and putting 6,000 jobs in jeopardy.

As per the last financial information publicly available, House of Fraser employs 17,500 people - 6,000 direct and 11,500 concession staff.

In a formal communication to the Luxembourg Exchange, House of Fraser said: “In light of C.Banner’s announcement (and as per House of Fraser’s previous statement to the Luxembourg Exchange), 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.”

House of Fraser is already looking for alternative investors

As reported by Sky News Alteri Investors would be among a small number of alternative investors. Sources close to HoF quoted by the television channel said Alteri was one of several "credible" potential investors, alongside Sports Direct International. Mike Ashley’s retailer had previously offered a 50 million pounds secured loan.

Various market analysts have voiced their concerns about House of Fraser’s immediate future, advancing it’s highly likely the retailer went into administration.

As veteran retail analyst Richard Hyman summarised back in June, House of Fraser's difficulties can be explained by a lack of investment, declining relevance with shoppers, a lack of brand differentiation and a failure to focus on the store's core customer. Hyman also put the retailer’s difficulties in context, assuring the hurdles House of Fraser is going through reflected the "most difficult retail market anyone has ever seen".

Image:Womenswear A/W 2018 Courtesy of House of Fraser

 

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