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Billionaire Day weighs House of Fraser rescue bid

By Mark Kleinman, City editor
The high street billionaire who owns Jaeger is exploring a bid to save House of Fraser (HoF) as the department store chain teeters on the brink of collapse.
Sky News can reveal that Philip Day, the owner of Edinburgh Woollen Mill Group, is one of a small number of potential investors referred to by HoF in a statement on Wednesday disclosing it was in talks with unnamed backers.
The discussions with what HoF referred to as "alternative investors" have been made necessary by delays to, and the eventual collapse of, a €70m funding deal from the Chinese owner of Hamleys.Sources said that Mr Day, who has used a canny series of takeover swoops to amass one of Britain's largest retail empires, was at the early stages of a potential bid for HoF, which needs to secure fresh financing this month in order to prevent its collapse into administration.One source said on Thursday that Mr Day could yet decide not to table a formal proposal to acquire HoF depending upon due diligence and discussions with the company.The details of a bid from Mr Day are unclear, including how many stores or jobs he would propose to salvage.If he does proceed with an offer, it would set up a takeover tussle between two retail billionaires for one of the high street's oldest and best-loved names.Sky News revealed earlier this week that Mike Ashley, the Sports Direct International tycoon who also owns Newcastle United FC, was in talks about providing a €50m secured loan to HoF.Alteri Investors, a specialist retail turnaround fund, has also held talks with HoF about a deal in recent days.The ailing department store chain employs more than 17,000 people directly and through in-store concessions, with 6000 of those jobs set to be axed if the company survives long enough to overcome a legal challenge from a group of landlords.Mr Day, who is based in Dubai, is little-known beyond his company but has grown in prominence through the acquisitions of brands such as Austin Reed, Jaeger, Jane Norman and Peacocks.Globally, Mr Day's business employs 24,000 people, the vast majority of whom are in the UK.A spokesman for Mr Day declined to comment on his interest in HoF.Mr Ashley, who already owns an 11% stake in HoF, is regarded as being in a strong position to take control of HoF, either solvently or after it falls into administration.He has made little secret of his interest in owning HoF outright, having tried to buy it in 2014, when Sanpower gained control.Under his stewardship, Sports Direct has accumulated stakes - often through complex financial instruments - in a number of British high street chains, including HoF's rival, Debenhams, and French Connection.
In a letter sent to HoF last month, Sports Direct said it had cash resources available for investment and the ability to support HoF in areas such as "warehousing, online sales and the running of the business generally".HoF requires new capital to purchase stock ahead of the crucial Christmas trading period, with its lending banks, led by HSBC, said to be reluctant to provide further financing with the company's survival in the balance.In June, HoF, which is currently owned by China's Sanpower Group, confirmed plans to shut 31 of its 59 British stores through an increasingly controversial mechanism called a Company Voluntary Arrangement (CVA).HoF employs about 5000 people directly, with a further 12,500 people working in fashion and beauty brand concessions in its stores.Its restructuring plans have been rocked by a challenge in the Scottish courts from a group of landlords who are arguing that the restructuring plan imposes unfair financial pain on them.HoF had informally asked store landlords to agree to big rent cuts earlier this year, before signing off plans to conclude a CVA before the June rent quarter day.If it collapsed, it would be the biggest retail failure for well over a decade, and would come during a tumultuous period for the high street, with jobs being axed at chains including Carpetright, Debenhams, Mothercare and New Look.The CVA mechanism offers no guarantee of revival, with Toys R Us UK crashing into administration just weeks after its deal was approved earlier this year, with more than 3,000 jobs lost as a result.Retailers have become casualties of a tough market characterised by rising costs combined with caution among British shoppers.HoF, one of the best-known names in the British retail industry, has been living a hand-to-mouth existence for some time, with its shareholders periodically providing it with multimillion pound sums to enable it to pay landlords and concession operators.Last year, it lost nearly €44m as pressure mounted on the business.The company is carrying ‎hundreds of millions of pounds of debt, including a €350m bond which is publicly traded.
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It is run by executive chairman Frank Slevin and Alex Wiliamson, who was brought in from the Goodwood Group last year.HoF declined to comment.
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