The mooted closures of more than half of the stores of House of Fraser are set to push through after the settlement of the department store chain of a legal row with its landlords. Around e 31 of its 59 shops are now set to close in January next year.
The move places approximately 6,000 jobs at risk. However, it will not be adequate to secure the future of the troubled chain as it continues to look for the necessary investment.
House of Fraser disclosed that the company was currently “focused on concluding the discussion with interested investors” after the settlement with landlords had eliminated the risk that the legal dispute may have posed to the negotiations.
The landlords of the retailer had disputed the lifeline arrangement of the company, known as a CVA, with the creditors to attempt to reduce its rental bill.
It all comes following the report of the Sunday Telegraph that the finances of the retail chain were under intensifying pressure, pushing its bonds trading to an all-time low amounting to 30p.
The retailer has been affected by a series of credit rating downgrades and was required to make final-hour extensions to the company’s debts in order to avoid a “liquidity crisis”.
House of Fraser must finalise a deal soon in order to ensure the company’s capability to pay its bills, which includes rent that are due next month.
There had been some speculation that Mike Ashley, the owner of Sports Direct, may look to add to his 11 percent share in the firm. The billionaire owner of Edinburgh Woollen Mill, Philip Day, is also believed to be interested in the assets of the department store, as is Alteri, the turnaround specialist. Both billionaires have acquired retailers out of administration during the past.
The speculations come after C.Banner, a Hong-Kong listed company, dropped its plans to invest £70 million in the firm.
The proposed funding was to give the retailer a lifeline, helping it to continue its trading transactions until the crucial Christmas period, even following its announcement of its plans to reduce costs by closing down more than half of its 59 stores.
In the absence of a new backer, the chain could head into administration, placing 17,000 jobs in jeopardy.