House of Fraser has asked its banks to relax lending terms on its borrowings to give it headroom to buy more stock.

The department store asked its biggest lenders, Lloyds Banking Group and Glitnir, to change its terms according to The Telegraph.

In return House of Fraser has offered to pay a multi-million pound fee and increase the interest charges that it is paying on its £180m debt.

A source told the newspaper: “There is really significant growth in the business at the moment

“It means a huge opportunity – but the company needs the flexibility to buy much more stock over the next two to three years.”

The retailer however has tightly held covenant restrictions on its ‘cash cover’ which its needs loosened so that it can buy in more stock for its growing business in stores and online. The business said that it wasn’t in danger of breeching its covenants.

It is understood that its lenders will support the new debt structure. It needs the approval of at least 67% of junior and senior leaders in order to approver renegotiated debt terms before March 12. It has already secured the approval of 63% of its lenders.

House of Fraser was taken private in 2006 by now-defunct Icelandic investor Baugur.

Chairman of the 62-store chain Don McCarthy still has a 22% stake in the business while Scottish investor Sir Tom Hunter also has a 10% stake. The 33% stake that Baugur owned has now been taken over by Icelandic bank Landsbanki.

Last year the company paid down £20m of its borrowings.

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