House of Fraser bought out of administration by Sports Direct owner Mike Ashley
PUBLISHED: 10:24 10 August 2018 | UPDATED: 16:03 10 August 2018
House of Fraser has been rescued in a £90m deal by Sports Direct owner Mike Ashley, just hours after the failing chain was put into administration.
The retailer announced this morning that discussions between interested investors and its main creditors did not conclude in a “solvent solution” and it had no choice but to appoint administrators.
The move put 17,000 jobs at risk and raised questions over the future of its Norwich store in Chapelfield shopping centre.
However, in a stock market announcement just before 10am, Sports Direct said it had acquired all of the UK stores of House of Fraser, the brand and all of the stock in the business.
Prior to its collapse, Mike Ashley had held an 11% stake in the department store chain.
Staff are being informed that they will be transferred over from House of Fraser to Sports Direct.
House of Fraser had earlier hinted at the deal when it said that parts of the department store could still be rescued through a pre-pack administration process.
Offices and stores were expected to continue trading as normal.
In an announcement to the Luxembourg Stock Exchange, House of Fraser said: “All stores will be open for business as usual today.”
Mr Ashley is understood to have beaten off competition from retail rival Philip Day, the billionaire owner of Edinburgh Woollen Mill.
It is understood that Mr Day’s proposal was in excess of £100 million, would have avoided an administration and included House of Fraser’s pension scheme.
However, accountancy giant EY, which was overseeing the process, opted for Mr Ashley’s offer.
Sources said that Mr Ashley will now begin the process of turning some House of Fraser stores into Sports Direct outlets and rebrand others under the Flannels fascia.
Before the Sports Direct takeover, House of Fraser chief executive Alex Williamson said: “An acquisition of the 169-year-old retail business will see House of Fraser regain stability, certainty and financial strength.
“In the two weeks since the Cenbest and C.Banner transaction ceased, the directors have brought forward a number of potential buyers and the group’s financial advisers have run a comprehensive M&A process to identify and then develop other third party interest that has culminated in the senior secured creditors leading negotiations with parties at a critical pace.”
Paul McCarthy, centre manager at Intu Chapelfield, said: “We are aware that House of Fraser has been bought by Sports Direct. We await further details on their plans, and if these will impact their store at intu Chapelfield.
“Our customers can be assured that we will continue to work closely with existing and new retailers to deliver the great mix of shops, cafes and restaurants that they have come to expect from us.”