House of Fraser’s (HoF) promised £70m cash injection from Chinese conglomerate C.banner has fallen through, putting the brand in a precarious position after it was forced to enter a company voluntary arrangement (CVA).
The much-needed funds were promised on the condition that as part of the CVA the retailer would slash 6,000 jobs, close 31 of its 59 stores and reduce rent on 10 that would remain open; but a consortium of landlords protested the rent reductions, leading to delays on the investment.
C.banner has since confirmed that it has decided to no longer proceed with the investment. The Chinese company also issued its own profit warning within the same hour.
HoF said it is now in talks "with alternative investors and is exploring options to obtain the required investment on the same timetable.”
“Discussions are ongoing and a further announcement will be made as and when appropriate,” it said.
Sports Direct founder Mike Ashley is reported to be among those to be mulling over the provision of cash – he has an 11% stake in HoF – as it frantically tries to muster £50m to meet its £25m quarterly rent bill by the end of September, finance other debts, and fund its Christmas trading period.
Advertising review to go ahead
Despite the uncertainty, a spokesman for the brand said that the ongoing review of its advertising agency roster had not been postponed.
Chief marketing officer Paddy Earnshaw said at the time that the business had found itself at “a natural crossroads” and described the call to pitch as an “an opportunity to reinvigorate and shake-up our thinking by seeking fresh perspectives”.
“We're looking forward to seeing where this next stage takes us to answer the modern needs of our customer base,” he added.
It is not known the agencies that have been invited to pitch for the business.