Express & Star

Lifeline for Beatties staff as House of Fraser deal approved

Nearly 300 shop workers in Wolverhampton are able to breathe a sigh of relief today after Beatties owner House of Fraser escaped the threat of immediate collapse.

Published
Last updated
Beatties in Wolverhampton could have closed within weeks had the CVA not been approved

Loss of a crucial vote today could have pitched the department store chain straight into administration, with shops closing and jobs lost in weeks – or even days – rather than in seven months.

House of Fraser secured the backing of creditors and landlords for a rescue deal that will see half its stores, including Beatties, closing in early 2019 with the loss of 6,000 jobs.

WATCH: Simon Penfold on what today's deal means

If enough landlords had opposed the plan, it would almost certainly have tipped House of Fraser into immediate administration – leaving all 31 outlets facing closure with the loss of up to 17,500 jobs.

What now?

The retailer can now axe unprofitable stores and slash the rent it pays on 10 others.

While House of Fraser bosses believed the rescue deal – called a Company Voluntary Arrangement (CVA) – was ‘the only viable option’ it is understood its advisers and lenders had drawn up contingency plans for a full administration of the business, should it fail.

That would have triggered a sale process for the business.

House of Fraser in Birmingham, which used to be Rackhams, is also going to shut

The deal still leaves Wolverhampton facing the loss of its iconic Beatties store after 140 years but it gives the city and the site’s owners until early next year to find a new use for the building.

And for the 279 staff, it means they will get paid while they try to find new jobs – in some cases after decades working for the landmark store.

The CVA will also see the closure of the former Rackhams store in Birmingham’s Corporation Street, as well as branches in Telford and Shrewsbury, with the loss of 1,250 jobs.

Only the House of Fraser shops at Solihull and Sutton Coldfield will be left in the West Midlands, among 29 nationwide.

What did House of Fraser bosses say?

Commenting on the result of the vote, Frank Slevin, chairman of House of Fraser, said: “The approval of the CVAs is a seminal moment in House of Fraser’s history.

"We must now continue with the implementation of our restructuring plan.

"This is also an important milestone in the transaction with C.banner and moves us toward the completion of the capital injection first announced in May.”

Alex Williamson, chief executive officer of House of Fraser, added: “The CVA proposals have been approved by our creditors and we are grateful for their ongoing support and belief in the future of House of Fraser.

"This was clearly a difficult decision to take but is, ultimately, the only one to secure our future.

"Our focus is on supporting all of our affected colleagues and we are exploring every opportunity available to them working alongside the Retail Trust and the wider retail community.”

C.banner stake

There had been fierce opposition to the CVA from some landlords, who feel they are the big losers.

Winning the vote means Chinese firm C.banner, owner of Hamleys toy store, will buy a controlling stake in House of Fraser and then pump £70 million of new cash into the business.

The rescue also gives the department store chain valuable extra time from its lenders.

Following discussions with HSBC and Industrial and Commercial Bank of China, House of Fraser agreed an extension to a £125 million term loan and a £100m revolving credit facility, both tied to the company winning the approval of the CVA restructuring plan.

Sports Direct chief Mike Ashley, who owns 11 per cent of House of Fraser, was widely tipped to make a swoop on the department store if that had not happened.