Sport Direct lands House of Fraser in £90m clearance sale

By James Wallace - Friday, August 10, 2018 12:18

Sports Direct, ran by Newcastle United owner Mike Ashley, has completed a cut-price cash swoop on House of Fraser (HoF) for £90m.

The deal consists of “all of the UK stores of House of Fraser, the House of Fraser brand and all of the stock in the business,” said in a statement.  

Ashley’s deal, via administration, removes liability for pensions and redundancies, compares with reported HoF net assets of £110.7m as at 28 January 2017, the last date to which statutory accounts are available for the parent company and prior to the appointment of the administrators.

However, HoF reported a pension surplus of £28.5m, as at the reporting date, as well as gross assets of £946.3m and a £14.7m net profit.

This morning, Alan Hudson, Hunter Kelly, Colin Dempster and Craig Lewis from EY’s restructuring team were appointed as joint administrators to affiliated House of Fraser entities.

Sport Direct, which already owned 11% in HoF, fended off challenges by rival retail tycoon, Philip Day, founder of Edinburgh Woollen Mill Group, and the Apollo-backed Alteri Investors.

Ashley’s Sports Direct also owns a 29.7% stake in Debenhams, but he has voiced irritation of the retailer’s failure to heed his advice which reported significant profit falls.  It is unclear how many of the 59 HoF department stores across the UK and Ireland stores, and 16,000 employees, will be retained under Ashley.

EY said in a statement that since the withdrawal of the proposed Cenbest and C.Banner transaction, HoF “has been in a race against time to secure sufficient funding to secure its future”. 

It continued: “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.”

Alan Hudson, Joint Administrator added: “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.”

James Wallace is a freelance consultant and can be reached via Linkedin or email: jawallace32@gmail.com

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