House of Fraser has staved off the risk of administration as the green light was given by creditors to axe more than half of its store estate, resulting in up to 6,000 job losses, while additional cost cutting plans could also see it relocate its Granite House office in Glasgow.
The struggling department store chain will close 31 out of its 59 outlets through a company voluntary arrangement (CVA), which will also allow it to secure rent reductions on its remaining shops.
The House of Fraser store on Princes Street in Edinburgh’s west end will be among the stores to shut, affecting 127 jobs.
Closures will affect up to 2,000 staff and a further 4,000 workers across brands and concessions.
READ MORE: Edinburgh’s House of Fraser set to close
House of Fraser secured the backing of more than 75 per cent of creditors, including landlords, for the CVA at a meeting yesterday.
Company chairman Frank Slevin described the vote as “satisfactory”.
He added: “I am now focused on the implementation of the business plan. We will continue to focus on that going forward. Today has given us part of the solution to that.”
Mr Slevin described the store closure plan as a “seminal moment” in House of Fraser’s history.
READ MORE: Is the House of Fraser Jenners store set to close?
The CVA was voted through despite anger among landlords, who have complained they are being forced to stomach a financial hit at the same time as House of Fraser enjoys new investment. Alongside the CVA, Hamleys owner C.banner is being lined up to buy a 51 per cent stake in the firm and will invest £70 million into what remains of the business.
Furious landlords berated House of Fraser’s management and their advisers from KPMG at yesterday’s meeting over how the CVA was conducted.
They complained their share of the vote had been structured unfairly in an attempt to push through the restructuring proposal.
Despite their protestations, a representative for two of House of Fraser’s landlords said there had been “no give” from the top team.
House of Fraser boss Alex Williamson had warned the store closures and job losses represented the “last viable” option to save the retailer, with the group at risk of collapse had the CVA been rejected.
Mr Williamson and Mr Slevin were both in attendance at the creditor vote.
House of Fraser said the shops earmarked for closure, including its Oxford Street store, would remain open until early next year.
The group also plans to relocate its Baker Street head office in London and the Granite House office in Glasgow to help slash costs and “secure House of Fraser’s future”.
Robert Hayton, from real estate adviser Altus Group, said the CVA would help reduce House of Fraser’s tax liabilities by an average of £14.29m a year.