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House of Fraser in talks with pension authorities over stake sale

High street struggler House of Fraser is in talks with pension authorities over its retirement fund after revealing a major ownership shake-up and restructuring drive.
The Pensions Regulator confirmed discussions with the company were taking place, as control of the retailer shifts to Hamleys toy shop owner C.banner International Holdings.
House of Fraser has two pension schemes with around 4,000 members. It had assets of ?705.1m and liabilities of ?608.2m to March this year.
Companies undergoing a change of ownership are encouraged to seek clearance for the deal from the TPR and explain how they will protect the pension fund going forward.
The Daily Telegraph understands the troubled retailer is also in talks with the Pension Protection Fund, the safety net for retirement funds when companies collapse.
House of Fraser in talks with pension authorities over stake sale

High street shoppers

Credit:
Nick Ansell/PA
China’s C.banner is buying a 51pc stake in House of Fraser from majority shareholders Nanjing Cenbest and plans to invest ?70m of fresh capital into the business.
However, store closures and potential job losses are front and centre of the deal, with House of Fraser looking to shore up its fortunes by launching a Company Voluntary Arrangement (CVA).
A CVA, a type of insolvency process that allows companies to shut stores and drive down rents, could lead to swingeing cuts to the retailer’s 59-strong store estate and trigger hundreds of job losses.
House of Fraser employs around 6,000 people and 11,500 concession staff.  
A decision on whether to progress with the overhaul will be confirmed in early June, with the deal set to complete by the end of that month.
House of Fraser is 89pc owned by Nanjing, a subsidiary of China’s Sanpower. Nanjing will hold on to a “significant minority interest” in the retailer once the transaction is complete.
Moody’s said the deal and CVA plans had helped ease concerns over the financial state of the business.  
The credit ratings agency downgraded the retailer in December after flagging risks to its capital structure.
Moody’s analyst Victor Garcia said: “The CVA would allow House of Fraser to reduce its rent bill and to exit long dated lease agreements in unprofitable locations.
“This, along with the injection of fresh capital in the business will facilitate and accelerate the transformation of the company towards a more credible omnichannel retailer while alleviating near term liquidity concerns.”
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