THE future of House of Fraser is in doubt after its potential Chinese saviour was forced to drop a £150m share placing intended to fund a rescue deal.
C.banner, the Hong Kong-listed owner of Hamleys, said that a dive in its share price meant plans to raise funds to invest in the department store group House of Fraser had been “rendered impracticable and inadvisable”.
House of Fraser said it was in discussions with alternative investors which are said to include Sports Direct owner Mike Ashley, the former Rangers shareholder.
The Newcastle United owner controls an 11.1 per cent stake in House of Fraser and a near-30% stake in Debenhams.
House of Fraser said it was “exploring options to obtain the required investment on the same timetable”.
House of Fraser had agreed to close stores as part of the rescue deal, and in June creditors approved a restructuring plan which would see 31 of its 59 stores close early next year and pave the way for the loss of 6,000 jobs.
A string of British retailers have either gone out of business or announced plans to close shops in recent months as they struggle with subdued consumer spending, rising labour costs and higher business property taxes as well as growing online competition.
C.banner had been planning to raise the money needed to invest in House of Fraser by issuing new shares.
However, the Hong Kong-listed company's shares have fallen by 70% in the past two months and it issued a profit warning on Wednesday.
In a statement to the Hong Kong stock exchange, C.banner said the share placing had been "rendered impracticable and inadvisable" and the agreement was therefore being terminated immediately.
In response, House of Fraser said it was in talks with other investors and was exploring other financing options: "Discussions are ongoing and a further announcement will be made as and when appropriate."
Mike Ashley is understood to have already approached the retail giant with an investment offer that could save jobs and stores.
It is said the approach was made four weeks ago, with the Sports Direct supremo saying he could offer "something better" than C.banner.
The billionaire is understood to have offered House of Fraser a £50 million loan.
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