Retail tycoon Philip Day, who lost out in his bid to acquire House of Fraser last week, has urged winning bidder Mike Ashley to ensure the chain’s creditors and concessionaires are paid in full.
Sports Direct owner Ashley acquired House of Fraser for £90m in a pre-pack deal after it was briefly placed into administration on Friday morning, following intense negotiations with interested bidders which included Day and restructuring specialists Hilco and Alteri Investors.
In a statement to The Times, Day said that Ashley had landed the retailer for a knock-down sum and as such he should act “honourably” and ensure suppliers and concessionaires are paid in full. It is believed these suppliers are owed around £70m but much of the price Ashley paid for the business will go to its banks and bondholders, leaving little for unsecured creditors with some suggesting it could be just 2p or 3p in the pound.
The statement from Day to the newspaper read: “House of Fraser . . . was bought conservatively as Mr Ashley has recognised. Given that fact, Mr Day would hope that Mr Ashley does the honourable thing and pays all suppliers and concessionaires on date and in full.”
Day, who owns brands such as Edinburgh Woollen Mill, Jaeger and Austin Reed, claimed to have made a higher bid for the department store, which was rejected by its lenders but further details of his proposed plan are not known. It had previously been reported that Day’s bid would not involve taking the business into administration, but would extend on a previously agreed CVA process that involved the closure of 31 of its 59 stores.
Ashley has vowed to keep as many of the 59 stores open as possible – though industry watchers are expecting some closures and it is possible some branches may be converted into Sports Direct stores – and has said he intends to create the “Harrods of the High Street”.
“We will do our best to keep as many stores open as possible. It is vital that we restore the right level of ongoing relationships with the luxury brands. Our deal was conservative, consistent and simple. My ambition is to transform House of Fraser into the Harrods of the high street,” Ashley said on Friday after completing the deal.
As well as Sports Direct, Ashley’s empire also includes multi-brand retailer Flannels, which sells luxury brands such as Saint Laurent, Fendi, Burberry and Victoria Beckham. It is believed the group will try to capitalise on these relationships to aid its plans to reinvigorate House of Fraser.