House of Fraser chairman, Frank Slevin, said the retailer is on track with its plans to enter the proposed CVA agreement

House of Fraser chairman, Frank Slevin, said the retailer is on track with its plans to enter the proposed CVA agreement

House of Fraser says its plans to propose a company voluntary arrangement (CVA) later this month remain on track, despite media speculation it is on the brink of collapse and could only be saved by mass store closures.

In a statement yesterday (3 June), the UK department store retailer referred to the "inaccurate and unhelpful media speculation" and said it continues to have constructive talks with its banks who are positive about the plans.

Last month, House of Fraser announced plans to reduce its store portfolio as part of a company restructure, which will see Chinese retail group C.banner acquire a 51% stake in the company, subject to House of Fraser restructuring its store portfolio. 

As a result, the retailer intends to launch a company voluntary arrangement (CVA) where a reduction in its store number will provide the business with an effective platform for future growth.

Now, House of Fraser says it is in close dialogue with its lending banks who are supportive of the company's plans and the transaction with C.banner is progressing as expected.

According to the retailer, on Friday (1 June), C.banner – which designs, manufacturers and sells branded women's footwear in China, and toys globally through its Hamleys chain – successfully entered into subscription agreements for new shares in C.Banner of HK$1.3bn (GBP124m), and yesterday, "irrevocable undertakings" were signed by the majority shareholder in C.banner approving all elements of the proposed transaction.

"We are on track with our plans to enter the proposed CVA agreement. The funding news from C.banner is another important milestone in this complex process," says House of Fraser chairman Frank Slevin.

CEO Alex Williamson adds: "If we are to deliver a sustainable, long-term business supported by new liquidity then we need to make difficult decisions about our underperforming legacy stores. I am conscious that inaccurate speculation only feeds the ongoing uncertainty for my colleagues in the business and I reassure them we will share further news when we have it."

Last month, C.banner reported House of Fraser had booked a loss of GBP37m (US$50.2m) in 2017, in what it called a "challenging" year for the company. In documents filed to the Hong Kong Stock Exchange (HKEX), the Chinese retail group said the loss for the year ended 31 December compared to earnings of GBP5.5m in 2016.

House of Fraser is among a number of UK retailers, including Mothercare and New Look, to have recently come under fire from high street landlords who accuse the retailers of pushing them into accepting lower rents via increasingly controversial CVAs.