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Sports Direct strikes £90m House of Fraser rescue deal

11 August 2018

Mike Ashley's Sports Direct will attempt to keep as many House of Fraser stores open as possible following a £90 million rescue of the ailing retailer.

Mr Ashley's deal was struck through a pre-pack administration process, where a company is put into administration before a new buyer cherry-picks the best assets.

The listed sports retail group, controlled by tycoon Mike Ashley, has agreed to buy the business and assets of House of Fraser from the administrators of House of Fraser Ltd, House of Fraser (Stores) Ltd and James Beattie Ltd, the group's main operating companies for £90m.

"The group has acquired all of the United Kingdom stores of House of Fraser, the House of Fraser brand and all of the stock in the business".

House of Fraser at Rushden Lakes will be open as normal today (Friday) despite the company calling in the administrators.

The retailer has one store in Dublin and one in Belfast, though neither were in the cohort of outlets marked for closure under the rescue plan.

"This is about global tax arrangements, because most of the online businesses are worldwide businesses".

In administration, Ashley will be able to choose which parts of House of Fraser he wants and those parts he does not.

At that time chief executive Alex Williamson said: "We are hopeful that the current negotiations will shortly be concluded".

"An acquisition of the 169-year-old retail business will see House of Fraser regain stability, certainty and financial strength".

House of Fraser was plunged into crisis last week after C.banner, the Chinese owner of Hamleys, pulled its investment into the troubled retail chain.

The company's chairman Frank Slevin added: "This has been an extraordinarily challenging six months in which the business has delivered so many critical elements of the turnaround plan".

Thousands of anxious shopworkers at House of Fraser stores and its concessions are now waiting to discover their fate.

Bosses had hoped to close 31 of its 59 stores under a company voluntary agreement, a controversial insolvency process which allows struggling businesses to close unprofitable sites and cut rents.

However, doubt remains over the long-term future of jobs and whether Mr Ashley will shut underperforming stores as part of a restructuring programme. Even within a struggling industry, the likes of House of Fraser look like relics of the Edwardian era, about as relevant to the 21st century as typewriters and video players.

Sports Direct strikes £90m House of Fraser rescue deal