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Frasers claims it is being frozen out of the Debenhams sale process

Lauretta Roberts
05 September 2020

Frasers Group is being frozen out of the Debenhams sale process because it has refused to sign an NDA preventing it from speaking to the chain's landlords for the next 18 months, its finance chief has claimed.

Chris Wootton, who is CFO at Mike Ashley's retail empire, told The Times that administrators for Debenhams, FRP Advisory, were preventing Frasers Group from taking part in the sale process.

It is reported that the administrators are worried that Sports Direct and House of Fraser parent would use the opportunity to speak to landlords to strike deals on properties and cherry pick certain site, thus devaluing Debenhams.

Wootton denied this was the group's motivation and said: “We are not going to buy a business without knowing how stores are performing. We have a track record of buying businesses and we are the most likely party to save jobs.”

Frasers Group, then Sports Direct International, bought House of Fraser out of administration in the summer of 2018. In late 2018 and early 2019, Mike Ashley tried on a number of occasions to take control of Debenhams, which was then a listed company in which he owned an almost 30% stake.

Debenhams investors, led by Silverpoint Capital, repeatedly refused his offers and instead formed a consortium, known as Celine, to buy Debenhams in a pre-pack administration last Spring that wiped out Ashley's shareholdings. He described the move as a "national scandal".

Debenhams was placed into administration again during lockdown but has since re-opened 124 stores. Bankers from Lazard have been appointed to oversee a sale process while Hilco has been placed on standby to act as liquidators as a contingency.

Previous reports have suggested that Ashley had cooled on the idea of buying all of Debenhams but that he might interested in up to 30 sites. Fashion and home chain Next is also said to be investigating the possibility of taking some stores. Next has already taken over a number of former Debenhams sites in Intu and Hammerson properties for its new Beauty Hall from NEXT concept.

Debenhams denied that it was blocking Frasers from the process saying that the NDA signing was standard practice and that there was "encouraging interest" in the chain, though a sale was not necessarily a foregone conclusion. Silverpoint may yet decide to retain the business.

Its chairman Mike Gifford has said the business was trading well and generating cash but it is benefitting from the Government's business rates holiday and rent reductions. Industry watchers argue then when full operating costs come back into play, the business will struggle.

Read our recent analysis, Can Britain's Department Stores Survive the Pandemic?, here.

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