House of Fraser could collapse into administration with 17,000 UK jobs at risk as firm pulls out of rescue deal
The department store could go bust putting thousands of jobs at risks after its potential new owner pulled out of a rescue deal
HOUSE of Fraser is on the brink of collapsing into administration with 17,000 jobs at risk after its potential new owner pulled out of a rescue deal.
The department store was due to be rescued by a £70 million investment from Hamley’s owner, C.Banner.
That rescue deal would have involved axing 31 of its 59 stores, with the loss of 6,000 workers.
But C.Banner was forced to abandon the plan after a slump in its share price, in a fresh setback for House of Fraser.
In a statement, the Chinese firm admitted their plan had “been rendered impracticable and inadvisable, and therefore no longer intend to proceed with the placing.”
Fears are now growing that the House of Fraser could go bust if fails to find a new backer.
About 17,000 people work for the department store including 6,000 staff directly employed by the retailer and 11,000 concessions workers.
An accountancy firm, EY, is on standby in case a new deal with another buyer can’t be reached and the firm goes under.
The struggling retailer said it was in discussions with alternative investors and “exploring options to obtain the required investment on the same timetable”.
Mike Ashley, who launched Sports Direct, is said to be one of those interested in buying the struggling firm – but talks are at an early stage.
The company added in a statement: “Discussions are ongoing and a further announcement will be made as and when appropriate”.
House of Fraser is struggling to borrow to pay bills because its finances are said to be “tantamount to default”.
There are fears the company will be unable to stock its current 59 stores and there are also concerns about its £120million pension scheme.
It’s the latest blow to the high street as retailers struggle with rising business rates, competition from online rivals and a slowdown in consumer spending.
SHUTDOWN Which high street stores have closed in 2018? Shop closures in full from Mothercare and Maplin to Toys R Us, Carpetright and Poundworld
Earlier this year, two of the country’s largest retailers, Toys R Us and Maplin collapsed putting thousands of jobs at risk.
Last month, Mothercare announced it will shut 60 stores, leading to the loss of hundreds of jobs.
It follows similar moves taken by New Look and Carpetright, which are expected to close 60 and 92 stores respectively, putting hundreds of jobs at risk.
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