House of Fraser close to being sold for just £1 before Mike Ashley deal, administrators reveal

EY received offers from 48 parties for the department store chain, with two of those considered most viable

Ben Chapman@b_c_chapman
Friday 17 August 2018 15:02
House of Fraser to shut 31 stores and put 6,000 jobs at risk

House of Fraser’s administrators considered selling the 159-year-old department store chain for £1 before accepting Mike Ashley’s £90m offer.

EY, the accountancy firm which oversaw the sale, said offers from 48 interested parties were considered with two of those believed to be the most viable: Mr Ashley’s Sports Direct and an unnamed bidder offering £1.

The unsuccessful bid would have seen House of Fraser’s secured creditors write off the vast majority of their loans, with the repayment of the remaining balance to be deferred.

After further changes to the bid during negotiations, the proposal was considered too uncertain and Mr Ashley’s offer was accepted, EY said.

The admission comes as fellow retail billionaire Philip Day circles House of Fraser, seeking to snap up stores.

Mr Day is understood to be in talks with landlords about buying up or renting around 15 sites, and is open to taking on more.

These would then be converted into Day’s department stores.

The retail billionaire is said to be willing to pay higher rents than House of Fraser, a move that risks infuriating new owner Mike Ashley.

EY also confirmed that House of Fraser burned through £65m in the 12 months to the end of January, as the chain’s financial position deteriorated rapidly.

The department store chain cancelled all online orders and shut down its website after warehouse operator XPO Logistics stopped processing orders last week because of a payment dispute.

The retailer said the decision was made due to delays with delivering online orders. House of Fraser also told customers on Thursday that their gift cards and vouchers would no longer be accepted online or in store.

The high street chain collapsed into administration last week, and was quickly snapped up by Mr Ashley.

The retail tycoon has since outlined his plans to make House of Fraser into the “Harrods of the high street” and has vowed to keep 80 per cent of stores open.

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