Chinese retail group C Banner has called off its plans to invest £70m in House of Fraser, the department store chain has revealed.
In a joint statement, C Banner and House of Fraser confirmed that the Chinese owner of Hamleys is “no longer intending to proceed with the placing as announced on 16 May”.
House of Fraser said: “In light of C Banner’s announcement (and as per House of Fraser’s previous statement to the Luxembourg Exchange) House of Fraser is in discussions 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.”
C Banner said its plans to raise funds to invest in HoF had been “rendered impracticable and inadvisable” after its own share price plummeted.
C Banner had planned to place shares which would cover the £70m it needed to finance the investment in HoF, with a target share price of around HK$2.65 (£0.25) - HK$3 (£0.29) expected as sufficient to raise the capital needed.
However since June the share price of C.Banner International Holdings has slumped from HK$2.42 (£0.23) when the share listing was placed to HK$0.71 (£0.06).
In July, C Banner said it was delaying its investment until legal proceedings with a group of landlords over the department store’s company voluntary arrangement were resolved.
Earlier this week, it was revealed that Mike Ashley’s Sports Direct had taken an interest in lending the troubled department chain up to £50m in finance.
On 31 July credit ratings agency Moody’s stated that House of Fraser was “technically” in default of its loans.