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Debt levels put House of Fraser future in doubt after takeover talks collapse

Fears are growing for the future of House of Fraser after it emerged that the chain’s heavy borrowings scuppered an attempt to raise fresh financing.
The company is understood to have held talks with Alteri Investors, a turnaround firm, about a cash injection of around ?40m. However, discussions collapsed because the department store group’s main assets have already been pledged as collateral against existing debts, The Sunday Times reported. It has ?400m of loans, made up of bank debt and bonds.
The chain’s financial predicament will fuel speculation that House of Fraser could be the next high-profile retailer to run into trouble.
The industry has been hit by a flurry of casualties in recent days with Mothercare, Carpetright, Bargain Booze owner Conviviality, and New Look, all forced to seek help.
Debt levels put House of Fraser future in doubt after takeover talks collapse

Carpetright added to the high street's woes this month as one of several firms seeking to implement radical plans to keep them afloat

Credit:
Jason Alden/Jason Alden
House of Fraser has been dogged by rumours of a cash-crunch ever since Chinese tycoon Yuan Yafei bought the company in 2014.
In September, Yafei’s company Sanpower pumped ?25m into the business, its first cash injection since buying the chain three years ago, as losses widened to almost ?9m.
Then, in January, Yafei took the rare step of issuing a public statement in an attempt to calm talk of difficulties saying he “remains confident” in House of Fraser’s prospects.
Under Sanpower, House of Fraser has sold off some of its brand names and associated intellectual property for ?30m. It has also identified ?26m of annual cost savings, and been trying to persuade landlords to slash their rents.
On Friday, Sky News reported that the retailer’s banks had hired EY amid concerns about its future.
A spokesman said: “House of Fraser is a privately-owned business. We have the full financial support of our shareholders.”
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