House of Fraser has been thrown a lifeline by two of its major lenders after an agreement was secured to extend credit facilities and loans to the end of 2020 - as long as its CVA plans are approved.
It is understood that both HSBC and the Industrial and Commercial Bank of China have agreed to extend a £125m loan and also a £100m revolving credit facility to the retailer until the fourth quarter of 2020.
According to once source the extension, if given go-ahead, will allow the troubled chain to escape “lurching from day to day in a search for credit” and place itself on a firmer financial footing.
A source close to the retailer said: “There is a viable business in [House of Fraser], but it isn’t viable until the CVA has been triggered and the firm undergoes a financial restructure.”
The outcome of a vote on the CVA process is expected to be announced on Friday afternoon. One vote, which is for a CVA on House of Fraser Stores, is expected to be approved and another on House of Fraser Limited, is not expected to go through.
House of Fraser Limited holds 14 of the retailer’s 59 store portfolio. Drapers understands the majority of the 14 stores are included in the 31 stores earmarked for closure under the CVA plan.
A House of Fraser spokeswoman said: “A CVA is the only viable option for House of Fraser at this stage and we are confident, if approved, that this will secure a sustainable future for House of Fraser.”