- Vivian Hendriksz |
London - Nanjing Cenbest, the parent company of House of Fraser Group Ltd. has confirmed that C.banner International, the Chinese owner of Hamleys iconic toy store chain, is set to acquire a 51 percent stake in department store group. The move sees C.banner becoming the majority shareholder of House of Fraser, with Nanjing Cenbest, part of the Sanpower Group, remaining a significant minority shareholder.
In addition to acquiring existing shares, C.banner will also subscribe for new shares in House of Fraser in order to provide new capital to accelerate the board's transformation plans. The agreement is expected to be completed by the end of June 2018 and is subject to shareholder as well as bondholder approval. However, there are a few conditional agreements to the transaction, one of which would see House of Fraser restructuring its store portfolio via a Company Voluntary Agreement (CVA), a move that will see a number of stores shut by early 2019.
C.banner to acquire 51 percent in House of Fraser Group and close down stores
"C.banner’s acquisition of 51 percent of House of Fraser, together with the new capital and restructuring, represents a step to securing House of Fraser’s long-term future," said Frank Slevin, Chairman of House of Fraser in a statement. "With the support of Nanjing Cenbest and Sanpower, Alex Williamson and his team have made substantial progress on our transformation journey."
"However, we need to go further and faster if we are to confront the seismic shifts in the retail industry. There is a need to create a leaner business that better serves the rapidly changing behaviours of a customer base which increasingly shops channel agnostically. House of Fraser’s future will depend on creating the right portfolio of stores that are the right size and in the right location."
Although House of Fraser does not specify what are the right locations for its stores, the group intends to launch a CVA in June and undergo a store restructuring plan to reduce its overall portfolio. According to a statement released by House of Fraser Wednesday afternoon, the reduction of the store portfolio will ensure the business has an "effective platform for future growth." The department store group plans to launch a formal CVA proposal sometime in the beginning of June. Depending on creditor approval, the store restructuring plan is set to conclude in early 2019.
"C.banner’s investment is a vote of confidence in our prospects," added Slevin. "We also know that if we are to deliver a sustainable, long-term business then we need to make difficult decisions about our underperforming legacy stores. I am all too aware that this creates uncertainty for my colleagues in the business and so we will be transparent with them throughout the process."
"These measures are essential to ensure that House of Fraser remains an iconic department store group for many years to come."
Photo: House of Fraser, China