Spotlight looks set to salvage Harris Scarfe

Spotlight is in pole position to breathe new life into the collapsed department store chain.

Harris Scarfe is hoping Spotlight will step in to save the department store chain Picture: Brendan Radke

The Spotlight retail empire, owned by the Melbourne-based Fried and Fraid families and estimated to be worth more that $1.65bn, has won the exclusive right to buy the failed department store business Harris Scarfe.

Spotlight is now in pole position to pick up the collapsed middle-market department store with creditors, who are owned between $62m and $72m, to vote on a proposal, with hopes the new owners will keep Harris Scarfe’s remaining stores open and breathe new life into the chain.

Harris Scarfe was placed into voluntary administration in ­December, the second time the retailer has collapsed, and its ­administrators at Deloitte have been seeking a buyer.

The administrators and receivers advised on Tuesday they had granted exclusivity to the Spotlight Group to buy the business. This followed a due diligence process that saw four parties short-listed and given access to the trading records.

“The Spotlight Group is a family-owned, longstanding and highly experienced Australasian retailer with a large property portfolio ideally suited to enabling future growth for Harris Scarfe employees and all stakeholders,” the administrators said.

Spotlight is a nationwide fabric, craft and home decor business founded by Ruben Fried and Morry Fraid and run by their ­extended family. It also owns the Anaconda outdoor adventurewear chain and the family also took a stake and board position in last year’s sharemarket float of David DiPilla’s HomeCo, a convenience retail property group.

The receivers are seeking to secure the ongoing employment for the remaining 1300 Harris Scarfe staff and the survival of the 170-year-old business.

Vaughan Strawbridge, one of the receivers from Deloitte, said: “There is still a lot of work we need to do together to finalise the transaction and we will be working with the Spotlight Group and the Harris Scarfe leadership team to make this happen.

“We are hopeful all the 44 stores will be retained under the sale but, ultimately, this will be dependent on how the transaction progresses over coming weeks.”

It is expected a settlement could happen as early as the middle of April.

A spokesman for Spotlight confirmed it had been granted the exclusive right to negotiate the ­acquisition of Harris Scarfe. Negotiations with landlords require resolution in the next week if a transaction is to be concluded.

“While far from a done deal, the acquisition of Harris Scarfe would offer Spotlight another iconic retail brand, and the potential to deepen our market share,” Spotlight managing director Avi Gilboa said.

“It also presents the opportunity to leverage our significant property interests, including Spotlight Property Group and ASX-listed HomeCo.”

The first Spotlight store was opened in the Melbourne suburb of Malvern in 1973. Today the group operates an extensive store network in Australia, as well as owning outlets in New Zealand, Singapore and Malaysia, with a total of about 6000 staff.