House of Fraser ropes in Rothschild for debt refinancing

Department store chain House of Fraser has brought investment bank Rothschild on board as the company looks at refinancing its debt package, reports The Telegraph. Rothschild is expected to advise the troubled UK retailer, owned by China’s Sanpower, on the refinancing of 225 million pounds (312 million dollars) of its 390 million pounds (540 million dollars) debt package, maturing in July 2019, while the remaining publicly traded bonds worth 165 million pounds (228.5 million dollars) are due to mature in 2020. The move follows after House of Fraser’s disappointing festive sales.

The retailer’s woes continued with rating agency Moody's downgrading its credit rating n December to Caa1 from B3 and a negative rating on its 165 million pounds of bonds coupled with a credit insurer deciding to withdraw cover to some of its suppliers. However, Yuan Yafei, Chairman of Sanpower, who acquired an 89 percent stake in the company in 2014, has said that he "remains confident" in House of Fraser's prospects. In September, Sanpower also injected 15 million pounds (20.7 million dollars) into the business.

Despite funding from Sanpower, House of Fraser sought rent reduction from landlords last month and signed a deal for 30 million pounds (41.5 million dollars) to sell the intellectual property rights of now defunct company-owned brands, in a bid to save costs. Instead of closing stores, the retailer also plans to reduce its shop space by 30 percent by leasing basements or top floors, the Evening Standard report adds.

The report further said that House of Fraser sold 175 million pounds (242.6 million dollars) of five-year bonds as part of a 2015 debt restructuring, which are now trading at a record low of 75p on the pound. Amid financial uncertainty, concerns for the department store chain are on the rise.

Picture:Facebook/House of Fraser


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