C.banner International cleared to rescue House of Fraser
Creditors of struggling UK department store chain House of Fraser have approved a lifeline for the business, which will see Chinese retail investor C.banner International inject capital and take majority ownership.
As reported last week, C.banner International, which owns toy retailer Hamleys, was poised to buy a 51 per cent stake in House of Fraser and invest £70 million fresh capital. But the investment was conditional on 75 per cent of creditors voting in favour of a Company Voluntary Agreement (CVA). That vote has now taken place and the rescue package can now proceed.
Under the CVA, House of Fraser will close 31 of its stores in the UK and Ireland – from early next year after the key Christmas trading season – and cull up to 6000 staff from its payroll, 4000 of them working in stores and concessions. It will relocate management offices into smaller, less expensive space and achieve rent reductions on 10 of the remaining stores.
After the downsizing, House of Fraser will have just 28 stores in the UK and Ireland.
“The approval of the CVAs is a seminal moment in House of Fraser’s history,” chairman Frank Slevin said after the result was released.
“We must now continue with the implementation of our restructuring plan. This is also an important milestone in the transaction with C.banner International and moves us toward the completion of the capital injection first announced in May.”
Slevin said the company will have “a more sustainable cost base and a platform for future growth to deliver an improved customer proposition” after the downsizing.
“This was clearly a difficult decision to take but is, ultimately, the only one to secure our future,” said CEO Alex Williamson after the vote.
“Our focus is on supporting all of our affected colleagues and we are exploring every opportunity available to them.”