House of Fraser will launch a company voluntary arrangement (CVA) process in June, as the department store retailer’s owner confirms it is to sell a 51% stake in the business to C Banner, owner of Hamleys.
C Banner has entered into a conditional agreement with HoF’s parent company, Nanjing Cenbest, to acquire a 51% stake in House of Fraser Group, as previously mooted by Drapers.
The transaction is expected to complete by the end of June and is subject to both bondholder and shareholder approvals. The conditional agreement is, amongst other things, subject to HoF restructuring its store portfolio.
House of Fraser intends to complete the restructuring plan via a CVA. The retailer said the reduction of the store portfolio will provide the business with “an effective platform for future growth.”
House of Fraser intends to initiate a formal CVA proposal around the beginning of June. Pending creditor approval, the store restructuring is expected to conclude in early 2019. It has not yet revealed how many stores it plans to close through the CVA process.
Last month Drapers reported that a CVA could be on the cards for the department store, which operates 59 shops in the UK.
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.”
As well as running Hamleys, C Banner is one of the leading retailers of mid-to-premium women’s formal and casual footwear in China. The group manages self-developed brands, namely C Banner, Eblan, Sundance, Mio, Badgley Mischka and Natursun, and it distributes United Nude brand products. The group also sells Steve Madden shoes in China through a joint venture.
Chinese conglomerate C Banner is a strategic partner of Sanpower Group, which operates Nanjing Xinjiekou as a subsidiary. C Banner is run by Sanpower chairman Yuan Yafei’s brother-in-law, Chen Yixi. HoF chairman Frank Slevin is chairman of the board at Hamleys of London.
In 2016, C Banner issued a statement to the Hong Kong Stock Exchange outlining an alliance with Sanpower Group that “may eventually lead to an acquisition” of a stake in HoF.
Nanjing Xinjiekou plans to retain a 38% stake in House of Fraser. The remaining 11% is owned by Mike Ashley.