House of Fraser says it might refinance 8 7/8% notes with new debt

By Angela McDaniels

Tacoma, Wash., July 24 – Highland Group Holdings Ltd. raised the possibility of refinancing House of Fraser (Funding) plc’s £250 million principal amount 8 7/8% senior secured notes due 2018 with debt financing.

House of Fraser began a consent solicitation for the notes on July 21 and released a statement on July 24 in response to enquiries from noteholders.

The consent solicitation is being held in connection with Nanjing Xinjiekou Department Store Co., Ltd.’s plan to acquire 89% of the class A ordinary shares of the company along with all of its preferred ordinary shares, class B ordinary shares and preference shares.

The company is asking noteholders to waive their right to require the issuer to offer to repurchase the notes in connection with the acquisition and all other defaults that might result from the acquisition.

“As disclosed on page 6 of the consent solicitation statement, there are ongoing discussions on the various options for the future financing of House of Fraser. No decision on the future financing and capital structure of House of Fraser has yet been taken, and it is presently expected that no decision will be made until after the completion of the proposed acquisition,” the company said in a news release.

“The prospective purchaser and House of Fraser have received proposals with respect to, among other things, the potential refinancing of the notes in whole with debt financing. Certain of these proposals contemplate the redemption of the notes in whole on or after 15 August 2015 at a redemption price of 106.6563%. ... Discussions are ongoing and no decision has been made at this date.”

The adoption of the proposed waivers requires the consents of the holders of at least a majority of the notes.

The issuer is offering a consent fee of £2.50 per £1,000 principal amount of notes. Half of the fee will be paid once the waivers become effective, and the other half will be paid on or prior to the completion of the acquisition.

The consent solicitation began July 21 and will expire at noon ET on Aug. 1.

The tabulation and information agent is Lucid Issuer Services Ltd. (+44 207 704 0880 or hof@lucid-is.com).

Highland Group is a London-based department store group.

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