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House of Fraser falls into administration, hopeful of buyer

Reuters Last Updated at 10 Aug 2018, 14:08 IST United Kingdom
House of Fraser falls into administration, hopeful of buyer
  • The retailer said it would seek to appoint individuals from Ernst & Young as administrators. (Image Credit: Twitter)

House of Fraser collapsed into administration on Friday, joining a growing line of UK retail casualties, though hopes remained that the department store chain could be salvaged, possibly by Mike Ashley's Sports Direct.

The move to seek creditor protection puts more than 17,000 jobs at risk at the company, whose history stretches back to 1849.

"Discussions with interested investors and its main secured creditors have not concluded in a solvent solution. The directors of the group's operating companies ... have therefore resolved to seek the appointment of administrators," House of Fraser said in a statement.

The retailer said it would seek to appoint individuals from Ernst & Young as administrators.

But it also said "significant progress" had been made towards completing a sale of the group's business and assets.

"The proposed administrators are expected to continue to progress those discussions with a view to concluding a transaction shortly after their appointment," it said.

Sky News reported that Ashley, Sports Direct's founder and chief executive, was close to striking a deal to buy House of Fraser.

Sports Direct, which owns an 11 percent stake in House of Fraser, could not be immediately reached for comment.

Nanjing Cenbest, part of China's Sanpower Group, paid 480 million pounds ($614 million) for an 89 percent stake in House of Fraser in 2014.

"We are hopeful that the current negotiations will shortly be concluded. An acquisition...will see House of Fraser regain stability, certainty and financial strength," said Chief Executive Alex Williamson.

House of Fraser said the business would continue trading, including all stores and offices, while the administrators sought to complete a sale.

A string of British store groups have either gone out of business or announced plans to close shops this year as they struggle with subdued consumer spending, rising labor costs, higher business property taxes and growing online competition.

House of Fraser's woes follow the collapse this year of Toys R Us UK, electricals group Maplin, drinks wholesaler Conviviality and discount retailer Poundworld.

House of Fraser said in June it needed to shut 31 of its 59 stores and makeup to 6,000 people redundant to survive, but that rescue programme was thrown into doubt after Chinese group C.banner pulled out of a plan to inject fresh equity.

(This story has not been edited by Devdiscourse staff and is auto-generated from a syndicated feed.)

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