Sports Direct wins House of Fraser for £90m after administration filing
No deal had been agreed to secure House of Fraser’s future on Thursday and the venerable department store chain called in administrators EY, but said the stores would continue trading with the search for a buyer set to move fast.
It’s believed HoF turned down a “lowball” offer to buy it and to continue operating 31 stores earlier this week. But billionaire Mike Ashley, the Sports Direct tycoon who had an 11% stake in HoF, always looked to be a frontrunner, although Philip Day, Edinburgh Woollen Mill owner, was also keen to buy a slimmed-down HoF, as was turnaround specialist Alteri.
It was clear on Friday that the situation would move fast with HoF saying talks with potential buyers had “not concluded in a solvent solution,” but that “significant progress has been made towards completing a sale of the group's business and assets. The proposed administrators are expected to continue to progress those discussions with a view to concluding a transaction shortly after their appointment.”
So exactly what happens now? As mentioned, all of its 59 stores are open, including the 31 that the firm had planned to close next year, although the 17,500 staff (including over 11,000 who work in its many concessions) will be uncertain about their futures as it's unclear how many stores Ashley will close.
Despite the intensive rescue talks of recent weeks, analysts said there was always a strong chance that HoF would end up in administration and a 'pre-pack' administration deal was most likely. That's a pre-agreed process that has been used many times in the UK in recent years, new owners who could have bought it prior to administration frequently preferring to buy a post-administration business that would be relatively free of legacy obligations such as pension liabilities and long-term store leases.
The deal needed to be concluded quickly as the company required a funding injection by August 20 to pay a rent bill.
Sports Direct has said little about the purchase, apart form confirming it in a regulatory filing on Friday. But HoF chief executive Alex Williamson had earlier said: "An acquisition of the 169-year-old retail business will see House of Fraser regain stability, certainty and financial strength."
And chairman Frank Slevin had added: “I am confident House of Fraser is close to securing its future.”
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