House of Fraser, the UK and Ireland’s premium department store group, has confirmed that its parent company, Nanjing Cenbest, has announced that international retailer C.banner has entered into a conditional agreement to acquire a 51% stake in House of Fraser Group Ltd. As part of the transaction, C.banner will subscribe for new shares in the company, providing vital capital to accelerate the Board’s transformation plans. House of Fraser will be closing several of its stores across the UK as part of a restructuring deal, Chinese conglomerate C.banner, the owner of Hamleys, is set to take control of the declining chain.
C.banner has extensive retail operations and assets including the iconic toy store Hamleys. Existing shareholder, Nanjing Cenbest, part of the Sanpower Group, will remain a significant minority shareholder. The transaction is expected to complete by the end of June 2018 and is subject to both bondholder and shareholder approvals.
The conditional agreement is, amongst other things, subject to House of Fraser restructuring its store portfolio. House of Fraser intends to complete the restructuring plan via a CVA. The reduction of the store portfolio will provide the business with an effective platform for future growth. House of Fraser intends to launch a formal CVA proposal around the beginning of June. Pending creditor approval, the store restructuring is expected to conclude in early 2019.
Commenting on the news Frank Slevin, Chairman of House of Fraser, said: “C.banner’s acquisition of 51% of House of Fraser, together with the new capital and restructuring, represents a step to securing House of Fraser’s long-term future. With the support of Nanjing Cenbest and Sanpower, Alex Williamson and his team have made substantial progress on our transformation journey. However, we need to go further and faster if we are to confront the seismic shifts in the retail industry. There is a need to create a leaner business that better serves the rapidly changing behaviours of a customer base which increasingly shops channel agnostically. House of Fraser’s future will depend on creating the right portfolio of stores that are the right size and in the right location. C.banner’s investment is a vote of confidence in our prospects. We also know that if we are to deliver a sustainable, long-term business then we need to make difficult decisions about our underperforming legacy stores. I am all too aware that this creates uncertainty for my colleagues in the business and so we will be transparent with them throughout the process. These measures are essential to ensure that House of Fraser remains an iconic department store group for many years to come.”
