House of Fraser has held talks with specialist lenders in a bid to secure emergency funding as it faces into difficult trading conditions.
The department store business has approached turnaround firms including Alteri to ask for fresh investment of up to £40m, according to The Sunday Times.
But the discussions are believed to have collapsed, leaving House of Fraser seeking alternative ways to secure a fresh injection of capital.
It comes after House of Fraser, which was bought by Chinese conglomerate Sanpower in 2014, suffered a bleak Christmas trading period.
Sales made through its 59 stores fell 2.9%, while online sales tumbled 7.5% compared to the previous year.
The embattled business has suffered a slew of senior exits over the past 18 months. Former boss Nigel Oddy, ex-chief customer officer David Walmsley, his predecessor in the role Andy Harding and chief information officer Julian Burnett are among the executives to have left the retailer.
Executive chairman Frank Slevin and new boss Alex Williamson, poached from the Goodwood Group, are attempting to revive the retailer’s fortunes.
As part of its turnaround plans, House of Fraser is bidding to slash its property bill and has asked a number of its landlords for substantial rent reductions.
The department store operator has around £400m of borrowings in a mixture of bonds and bank debt that it is looking to reduce.
It is thought that one of the obstacles in its fundraising talks with Alteri was the fact that the retailer’s assets have already been pledged as security to the syndicate of banks.
Any prospective new lender would have to find a way of taking security without compromising the existing borrowing arrangements.
A spokeswoman for the business said: “As you’d expect in the current market, [finance] providers are keen to talk to retailers.”
However, she added that the terms of the company’s existing banking arrangements meant it was unable to borrow from secured lenders.
According to Sky News, a clutch of House of Fraser’s existing lenders, thought to include HSBC and the Industrial and Commercial Bank of China, have hired accountancy firm Ernst & Young to advise them on the retailer’s future and the chances of them recouping their loans.
House of Fraser’s search for emergency funding will come as a fresh blow to the UK high street, which has suffered a torrid start to 2018.
As revealed by Retail Week, Carpetright is mulling a similar move in an attempt to slash its store numbers, while the likes of Mothercare, Moss Bross, Poundworld and Conviviality are all facing into turbulent times of their own.