House of Fraser rescued by Mike Ashley’s firm in £90m deal

Sportswear chain Sports Direct has snapped up House of Fraser in a £90m rescue deal that includes all of its stores.

In a statement to the stock exchange, Sports Direct, which is owned by Mike Ashley. confirmed it had bought the retailer for £90m in cash, shortly after it fell into administration this morning.

“The group has acquired all of the UK stores of House of Fraser, the House of Fraser brand and all of the stock in the business,” it said.

More details of what this means for the group’s 17,000 staff across its 59 stores are expected to follow.

The news follows this morning’s announcement that the stricken department store chain had appointed EY as administrators after talks with potential investors failed to result in a rescue.

Alan Hudson, Hunter Kelly, Colin Dempster and Craig Lewis from EY’s Restructuring team were appointed this morning as Joint Administrators (together ‘the Administrators’) to certain companies within the House of Fraser Group.

A statement said: “House of Fraser is one of the UK’s premium fashion, home and beauty retailer with 59 department stores across the UK and Ireland.

“The Group is the third largest group of traditional department stores in the UK and employs over 5,900 people. In addition, there are 10,100 who are employed in the various concessions with in the House of Fraser stores.

“It has been well documented that since the withdrawal of the proposed Cenbest and C.Banner investment transaction House of Fraser has been in a race against time to secure sufficient funding to secure its future.

“Since then the directors, representatives of the senior creditors and their respective advisors have been speaking with a number of parties in order to secure a solution.

“However, after exploring a range of options, it became clear that this would not be possible to achieve as a solvent solution and as such House of Fraser filed for insolvency protection this morning. Shortly after our appointment, the Administrators are pleased to confirm that they completed a sale of substantially all of the group’s business and assets to the Sports Direct group.”

Alan Hudson, Joint Administrator said: “We have worked very closely with management, its advisors and creditors in recent weeks and are pleased that we have been able to successfully conclude a sale of the business in short timescales which preserves as many of the jobs of House of Frasers employees as possible.

“It was a challenging transaction to achieve in such a short period of time which will ensure continuity of the business and preserve the goodwill.

“We hope that this will give the business the stable financial platform that it requires to flourish in the current retail environment.”

University of Salford retail expert Dr Gordon Fletcher commented on the possible ramifications for jobs, pensions, the stores and the brand.

“In administration, Ashley will be able to choose which parts of House of Fraser he wants and those parts he does not.

“This almost certainly will leave at least part of the pension fund in the hands of the Pension Protection Fund as well as the continued prospect of job losses, but helps to keep the doors open at some House of Fraser locations including the iconic former Kendal’s site on Deansgate, Manchester.

“That is in a prime location and Ashley seems to want upmarket and inner-city locations.”

He added: “A takeover will see House of Fraser become part of a group that includes Sports Direct and 30% of Debenhams.

“The advantages brought by the warehouses and logistics already managed by this group will be an important key in the recovery of the House of Fraser’s fortunes.

“So, House of Fraser may well survive, but it might look a bit different under the new regime.”

Shopworkers’ trade union Usdaw welcomed a swift end to House of Fraser being in administration.

Dave Gill, Usdaw national officer saod: “House of Fraser staff have been largely frozen out of the discussions about the future business so far and they were horrified to see the company fall into administration this morning.

“So we welcome a buyer for the whole business being found so quickly, which offers the best opportunity to save jobs.

“To be successful the new owners must listen to the staff and engage them fully in turning this company around.”

He added: “It is crucial that staff are treated with dignity and fairness through the transfer process and that is best done by the new owner recognising Usdaw as the trade union for House of Fraser staff.

“We are seeking urgent talks with Sports Direct.

“In the meantime, we are providing our members with the support, advice and representation they require at this very difficult time.”