House of Fraser rejects rescue bid for 31 stores set for closure

House of Fraser

House of Fraser has refused to sell 31 of its stores due for closure to the owner of luxury fashion house Fashion Collective.

According to City AM, the embattled department store rejected an offer from Paul McKie to take on the 31 stores set for closure in January 2019 as part of its CVA.

McKie is understood to have offered between £30,000 and £50,000 per store for the leases and rent obligations from September.

“We knew it was a bit of a lowball offer but we thought, since they’ve got this rent bill coming up, if they got rid of some of the stores we’d have taken on a chunk of that,” McKie told City AM.

House of Fraser declined to comment at this stage.

Earlier this week, House of Fraser settled a legal dispute with landlords who sought to challenge its controversial CVA, which will see 31 of its 59 stores shut entirely, and rents reduced on 10 of those that will remain open.

It is thought that the result of the legal challenge will now pave the way for the department store to secure the new funding it urgently needs to pay for its quarterly rent bill of nearly £25 million in late September and to make sure there is enough stock for the upcoming Christmas trading period.

Chinese investment firm C.banner, also the owner of toy retailer Hamleys, had promised an investment of £70 million for House of Fraser, which was conditional on the implementation of its CVA that was approved by creditors in June.

However C.banner recently pulled out of the deal, intensifying House of Fraser’s scramble to secure investment before the end of September.

Two retail moguls including Sports Direct’s Mike Ashley and Edinburgh Woollen Mill’s Philip Day are thought to be considering rescue deals.