House of Fraser Bankers Talked With Sports Direct Boss Over Funding Deal

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By James Petts from London, England (House of Fraser) via Wikimedia Commons

According to a report that was initially released by Sky News, the bankers who are acting for House of Fraser, a department store chain, have had some discussions with Mike Ashley, the boss of Sports Direct, regarding a new funding deal for the troubled business. The funding for the business will be in the form of a loan or an equity injection.

An 11 percent stake in House of Fraser is already owned by Sports Direct. Previously, Ashley expressed the latter’s interest in acquiring the chain way back 2014 when Sanpower, the current owners, took control.

Sky News also disclosed that House of Fraser is in need of £50 million to prevent it from collapse.

However, some sources who are close to the department store chain have rejected the idea that the survival of the chain is under threat.

Last May, the retailer seemed to have been given a lifeline when the owner of toyshop Hamleys, C.banner, agreed to a £70 million investment in exchange for a controlling 51 percent stake in the firm.

However, the investment that came from C.banner still depends upon the successful fulfilment of a company voluntary arrangement (CVA) with the creditors of the company and the closure of 31 of the House of Fraser stores.

The CVA has since been delayed by a legal challenge that was initiated by a group of landlords who have attempted to overturn the result, which in turn delayed the investment of C.banner.

Also last May, Ashley started a legal action against House of Fraser after its deal with C.banner, saying that he has been “frozen out” of its deliberations.

Sports Direct, a retailer, is owned by Ashley. He also owns, Newcastle, a football club, and some stakes in Debenhams, the rival of House of Fraser, and French Connection, a fashion chain.

House of Fraser refused to issue a comment regarding the matter and Sport Direct was not able to respond to requests for comment at the time of writing.