TG Jones to Close 150 Stores After Court Approves Rescue Deal
The owner of former WHSmith High Street stores, now trading as TG Jones, has secured court approval for a restructuring plan that includes significant rent reductions and store closures.
Up to 150 TG Jones stores are slated for closure following a court's approval of a significant restructuring plan for the retail chain. Modella Capital, which acquired the former WHSmith High Street stores last year and rebranded them as TG Jones, presented the plan to address challenging retail conditions and a looming insolvency.
The High Court heard that the business was facing a cash shortfall of nearly £8 million by the end of the week the deal was approved. A spokesperson for TG Jones stated the company was "highly distressed" and "running on fumes at the moment," having narrowly avoided running out of cash in April due to a £10 million loan from Modella and deferred liabilities, including a tax bill.
The approved restructuring will result in steep rent cuts for most of the remaining stores, with approximately 120 landlords expected to receive no rent for up to three years. Rents on hundreds of other locations will be reduced by 15% to 75%. Modella Capital stated that these measures are crucial for the business's survival and that cost savings will be reinvested into stores as part of a turnaround strategy.
Modella attributed some of the chain's difficulties to underinvestment by previous owners and the inability to retain the WH Smith brand name. The company also cited current challenging retail conditions.
The plan forecasts that TG Jones will operate 302 stores following the restructuring, though this number could fluctuate depending on whether landlords opt to terminate leases rather than accept reduced rents. Initially, there were 451 stores employing 4,700 workers.
The company's travel stores located in airports and railway stations were not part of this deal and remain under WH Smith's ownership. Modella Capital also retained the rights to the historic brand name.
While some suppliers and property owners, such as British Land, initially opposed the plans, Modella made concessions that led to the withdrawal of opposition. The judge overseeing the case, Mr. Justice Hildyard, approved the plans after determining that creditors would not be worse off under the restructuring than if the retailer entered administration. TG Jones Chief Executive Alex Willson welcomed the decision, stating it allows the company to proceed with its turnaround strategy and create a stronger, more sustainable business.