Sports Direct strikes £90m House of Fraser rescue deal

The troubled department store needs new funding by no later than next week

The British Department Store, House of Fraser will seek to appoint administers today after negotiations have broken down between investors and creditors.

Around 17,000 staff were told they would be transferring to Sports Direct as the businessman declared his aim to make House of Fraser the "Harrods of the high street", keeping as numerous 59 stores as possible open.

Newcastle United owner Mike Ashley has always been rumoured to have been interested in buying the department store giant - as well as Philip Day, chief executive of Edinburgh Woollen Mill.

House of Fraser is the third largest group of traditional department stores in the United Kingdom and employs more than 5,900 staff.

When it did open, a customer who tried to use a £100 gift voucher at the store said she had it declined.

"I suspect the House of Fraser site will undergo a change of use and be sold on, but Jenners is an iconic businesses that has a big cache and I think there will be an interest in re-inventing and investing in it".

Some 17,000 staff are being informed that they will be transferred over from House of Fraser to Sports Direct.

The deal expands Mr Ashley's retail empire, which also includes a stake in Debenhams.

Joint administrator Alan Hudson said the sale "preserves as numerous jobs of House of Fraser's employees as possible".

Ashley's stated desire is to make Sports Direct the "Selfridges of sport", emulating the status of the department store on London's Oxford Street.

The appointment of current chief executive Alex Williamson in July 2017 was controversial as he had no retail experience having previously worked for nine years at sporting company Goodwood.

Prior to the latest crisis, House of Fraser had recently agreed a so-called Company Voluntary Arrangement (CVA) with landlords to close half of stores, with 6,000 jobs in the firing line. It is understood that House of Fraser is up to date with payments to suppliers, but may need to find about £15million ahead of monthly rent bills due before the end of August.

The tycoon beat off competition from retail rival Philip Day, the billionaire owner of Edinburgh Woollen Mill.

It is unclear what Mr Ashley's plans are for the chain - but the move could in theory offer a reprieve for staff and customers.

While the department store entered rescue talks with a number of different companies, these have continued to break down over the past few months.

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