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House of Fraser 'holds talk with Sports Direct boss Mike Ashley over rescue bid'

Mike Ashley.
Mike Ashley.

Sports Direct tycoon Mike Ashley and House of Fraser have discussed a new investment deal for the struggling retailer, according to reports.

The billionaire, who already owns an 11% stake in the troubled department store, is said to have been asked to consider providing it with a £50 million loan.

House of Fraser announced plans to close 31 of its 59 stores in June, putting 6,000 jobs at risk, however a legal challenge has raised the prospect the rescue bid may fail.

According to Sky News, bankers acting for the retailer have held talks with with Mr Ashley's executives.

Mr Ashley had been tipped to make a swoop after House of Fraser announced its store closure scheme.

The retailer later secured significant breathing space from its lenders after they agreed to extend loans while the restructuring takes place.

However the Company Voluntary Arrangement (CVA) plans are being challenged by landlords.

They say they have been treated unfairly and legal action filed in Scottish courts could scupper the rescue attempt if successful.

Alex Williamson, chief executive of House of Fraser, has previously described the CVA as the "last viable" option for the business.

Another condition of creditors extending loans was the retailer receiving £70 million from Hamleys owner C.Banner, which is buying a 51% stake in the business and injecting new capital.

However the loan is reported to have been delayed by several months.

Days after the restructuring scheme was announced in June, Mr Ashley won a legal challenge to obtain the store's business plans, providing him with vital information in the event of an investment bid.

Mr Ashley bought his 11% stake in 2014 when 89% of the business was sold to Chinese conglomerate Sanpower in a deal worth £480 million.

The Sports Direct founder also has a 29.7% stake in Debenhams and strategic investments in businesses including Goals Soccer Centres and French Connection.

House of Fraser is one of a number of high street stores to seek controversial CVAs amid a rise in closures and failures.

Retailers have been hammered by Brexit-fuelled inflation, soaring business rates and falling consumer confidence.

Toys R Us and Maplin collapsed earlier this year, while the likes of Prezzo, Byron and Jamie's Italian have shut restaurants and culled hundreds of jobs