The future of House of Fraser in the West Midlands is under threat after the high-end department store chain agreed a buyout deal with the owner of toy shop Hamleys.

Chinese retailer C.banner has taken a 51 per cent majority stake in House of Fraser from its owner Nanjing Cenbest in a £70 million deal and announced a store closure programme.

C.banner has committed to making a significant investment into the business but the sale is conditional on House of Fraser shutting some of its 59 stores.

The group operates shops in Birmingham city centre, Sutton Coldfield, Wolverhampton, Solihull, Telford and Leamington Spa.

The chain will put forward a restructuring plan known as a company voluntary arrangement which will require the approval of landlords and bondholders.

Chairman Frank Slevin said C.banner's acquisition was "a step to securing House of Fraser's long-term future".

House of Fraser Birmingham

He added: "C.banner's investment is a vote of confidence in our prospects.

"We know that, if we are to deliver a sustainable, long-term business then we need to make difficult decisions about our under-performing legacy stores.

"I am all too aware this creates uncertainty for my colleagues in the business and so we will be transparent with them throughout the process."

House of Fraser's troubles came to the fore in January after it suffered a drop in sales over Christmas and started talking to landlords about reducing the size of its property portfolio.

Financial services firm KPMG has been drafted in to advise House of Fraser on its restructuring proposal with the terms of the plan likely to be finalised at the beginning of June.

House of Fraser in Sutton Coldfield welcomed customers after a multi-million pound refurbishment was completed
House of Fraser in Sutton Coldfield welcomed customers after a multi-million pound refurbishment was completed

The retailer is a subsidiary of Sanpower, a Chinese conglomerate chaired by Yuan Yafei.

Mr Yuan has voiced his commitment to House of Fraser, which has 6,000 employees and 11,500 concession staff, and has been pumping millions of pounds into the retailer to keep it on an even keel.