Sports Direct founder Mike Ashley has reportedly been put off going ahead with a planned rescue deal for House of Fraser, due to the department’s store pension schemes.
According to The Times, a source told the paper that Ashley had “no intention” of providing any more funding to the store, as it looks to secure a new investor. Although he already has an 11 per cent stake in the business, the source told the paper that Ashley is afraid of being “crucified” if anything were to go wrong with the chain’s two DB schemes.
A spokesperson for TPR said it is continuing its discussions with the company and the trustee of the pension scheme about the situation, and it is “monitoring developments closely”.
“We are disappointed to learn that the proposed investment is not proceeding and are in contact with the trustees, company and PPF to understand the implications of this for the scheme.”
House of Fraser is looking for a new investor as Chinese fashion conglomerate C.banner backed out of an agreement to acquire a 51 per cent stake in the chain, as its own share price tumbled. It left House of Fraser urgently seeking at least £50m in new funds from elsewhere, in order to avoid collapse.
Last week the store was also facing a legal challenge from landlords over its proposed Company Voluntary Arrangement. However, the dispute between the store and the landlords has been settled out of court meaning the CVA can now go ahead, along with the closure of 31 of its 59 stores.
“House of Fraser is focused on concluding discussions with interested investors as per the original timelines set out by the business and, recognising the risks in and around this litigation, has entered this settlement now to remove any risk to those discussions presented by this legal process,” it stated.