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House of Fraser offered credit lifeline if CVA approved

House of Fraser has been thrown a lifeline by two of its major lenders after an agreement was secured to extend credit facilities and loans to the end of 2020 - as long as its CVA plans are approved.

It is understood that both HSBC and the Industrial and Commercial Bank of China have agreed to extend a £125m loan and also a £100m revolving credit facility to the retailer until the fourth quarter of 2020.

According to once source the extension, if given go-ahead, will allow the troubled chain to escape “lurching from day to day in a search for credit” and place itself on a firmer financial footing.

A source close to the retailer said: “There is a viable business in [House of Fraser], but it isn’t viable until the CVA has been triggered and the firm undergoes a financial restructure.”

The outcome of a vote on the CVA process is expected to be announced on Friday afternoon. One vote, which is for a CVA on House of Fraser Stores, is expected to be approved and another on House of Fraser Limited, is not expected to go through. 

House of Fraser Limited holds 14 of the retailer’s 59 store portfolio. Drapers understands the majority of the 14 stores are included in the 31 stores earmarked for closure under the CVA plan.

A House of Fraser spokeswoman said: “A CVA is the only viable option for House of Fraser at this stage and we are confident, if approved, that this will secure a sustainable future for House of Fraser.”

Readers' comments (4)

  • Can anyone explain to me the significance of 14 stores being held by the parent company instead of the subsidiary, when it comes to the CVA? Does it mean that hypothetically only the stores in the subsidiary will close if that is the only CV to go through?

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  • What frustrates me is that many profitable, prudent and viable retailers across the country would like funding to expand but cannot gets a banks support. However, they are prepared to throw over a £100M each at the shower of retail fiscal ineptitude that is House of Fraser.

    A complete joke.

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  • Hi. As far as I understand it, the 14 stores that are held in House of Fraser Limited would close if that particular CVA fails, landlords would not receive rent (which would be reduced) due under the original CVA terms and the stores may close earlier than originally planned. Stores within the House of Fraser Stores CVA would be unaffected - this is apparently the majority of the retailer's stores.

    Also, from what I can gather, most of, but not necessarily all the stores in House of Fraser Limited were on the list of stores to close, however I was told that small amount may be on the list to stay open. Whether these do stay open if that CVA fails remains to be seen if that CVA does get voted down.

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  • Brilliant. Thank you for responding. I wasn’t sure, and despite being an ex-House of Fraser manager across several stores (hence the anonymity) back in my day we were kept in the dark about a lot of the technicalities.

    My thoughts to everyone who is affected.

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