LONDON — Chinese conglomerate Sanpower has suffered yet another blow, this time in the U.S., as it continues to hunt for a new buyer for the troubled British retail chain House of Fraser.
Sanpower has filed for bankruptcy protection and is seeking a buyer for its quirky electronics and homeware chain, Brookstone Inc., in the U.S. Across the pond, it is hoping to find a new investor to replace C.banner, which canceled a deal last week to buy a 51 percent stake in HoF. A HoF spokeswoman said Tuesday that talks with potential investors are ongoing, and she declined to comment on when a deal might emerge.
Sanpower Sourcing Group is the largest creditor in the Brookstone bankruptcy, and is owed $39.4 million. Brookstone, which sells novelty items, gadgets and electronics, such as drones, at-home massagers and fitness-tracking devices, said it plans to close its remaining 101 mall store locations, following “continued deterioration” of traditional retail mall traffic.
“We have taken several important steps to restructure the business and ensure that Brookstone will be well-positioned to succeed for years to come,” Brookstone’s chief executive officer Piau Phang Foo confirmed last week. “The decision to close our mall stores was difficult, but ultimately provides an opportunity to maintain our well-respected brand and award-winning products while operating with a smaller physical footprint.”
He added that airport, e-commerce and wholesale business divisions were all operating successfully, and should prove attractive to a buyer “with the financial resources and vision to carry our company into the future.”
Meanwhile, HoF’s U.K. adviser Rothschild is in the midst of round-the-clock talks to find a new investor after C.banner saw its share price collapse on the Hong Kong stock exchange, eliminating any possibility of it buying HoF.
C.banner, which owns Hamleys toy chain, had planned to inject 70 million pounds into HoF, which is struggling to pay its monthly expenses and find the cash for Christmas orders.
Suppliers are said to be on tenterhooks, and cannot decide whether to go ahead and ship the holiday merchandise or wait for a resolution to the HoF ownership drama.
Potential buyers for HoF include Philip Day, the Dubai-based billionaire owner of Edinburgh Woollen Mill and Jaeger, who is rapidly building a portfolio of distressed British retailers that sell generic, mid-market clothing.
Earlier this week, Day made a deal to buy Jacques Vert, a women’s wear brand, and is said to be taking a serious look at HoF, along with Alteri, a retail turnaround specialist. Mike Ashley, the controversial Sports Direct boss, was originally tipped as a front-runner, but is now reported to be uninterested in taking a stake.
Ashley also specializes in swooping on distressed clothing companies. His spokespeople did not return calls at press time.
If a new buyer is not found soon, HoF will collapse into administration, the U.K. equivalent of Chapter 11.
In June, HoF had filed an application for a CVA, or Company Voluntary Agreement, an insolvency process in Britain that allows indebted companies to restructure and strike deals with their creditors.
As part of its restructuring, HoF said it is also planning to close 31 of its 59 leased stores across the U.K. and Ireland, including the London Oxford Street flagship and another unit in the City of London. Some 6,000 layoffs are expected, the company said.
Following the CVA application, HoF’s landlords mounted legal challenges against the retailer in a bid to claw back as much rent as they could, although that issue has been resolved.
Earlier this week, HoF confirmed that it reached a settlement with the group of landlords, and that it was moving forward with the process of finding a new buyer.
“House of Fraser is focused on concluding discussions with interested investors as per the original timelines set out by the business and recognizing the risks in and around this litigation has entered into this settlement now to remove any risk to those discussions presented by this legal process,” the company said.