Ashley to buy House of Fraser Dundrum
Administrators to House of Fraser have said that there are "regulatory matters in the Republic of Ireland that need to be considered" before the billionaire Mike Ashley's Sports Direct Group can complete the proposed acquisition of the Dundrum Town Centre store.
Accountants EY were appointed last Friday morning as administrators to the House of Fraser Group.
A spokeswoman said: "While the Dublin store closed briefly this morning in order for the administrators to meet with staff and explain to them the events, it has now reopened. The store continues to trade and it is business as usual at House of Fraser Dundrum. The store will continue to trade as normal during the administration process."
House of Fraser is a prominent anchor tenant of Dundrum Town Centre and its presence in the centre was seen a major draw for the retail development when it opened in 2005. The store currently employs 146 people directly and 400 in concessions.
There was relief earlier this summer when the Irish store was not chosen for closure in an earlier survival plan, which saw 31 of its 59 shops close.
Ashley swooped in to rescue the department-store chain for £90m (€101m), staving off collapse for an anchor of the country's troubled shopping districts.
Ashley's Sports Direct International Plc agreed to acquire the 169-year-old retailer's UK stores, brand name and inventory. The move came after House of Fraser, which employs 17,000 people directly and through contractors, on Friday went to court to seek protection from creditors.
"This is a hugely ambitious move for Sports Direct," Richard Lim, chief executive officer of Retail Economics, said. "Turning around the business will not come easy."
The agreement averts a new dark turn for Britain's retail crisis after the failure of brick-and-mortar institutions such as Maplin Electronics, the UK arm of Toys "R" Us and department-store operator BHS. Pressure from online retailers such as Amazon.com and a rise in costs stemming from the pound's Brexit-induced weakness are crippling the chain stores.
Mid-market retailers like House of Fraser, founded as a textile shop in Glasgow in 1849, have been hit particularly hard, with rivals Debenhams and Marks & Spencer Group shrinking store space as their online businesses have been slow to take off. More than one-quarter of the UK's largest department stores have shut since 2010, according to retail consultancy Altus Group.
House of Fraser's £175m of floating-rate notes due in September 2020 were quoted at a bid price of 20 pence on the pound, according to BNP Paribas prices on Bloomberg. That's down from about 30 pence before the deal was announced. Creditors risk losing part of their investment as part of a rescue deal. Bloomberg Intelligence analysts calculate that recovery valuation of the bond is about 29 pence.
The deal expands Ashley's retail empire, which also includes a stake in Debenhams. A self-made billionaire who also owns Newcastle United football club, Ashley was one of at least four parties squaring off to rescue House of Fraser after China's C.banner International Holdings shelved plans to buy a majority stake.
Additional reporting: Bloomberg
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