TG Jones to Close Up to 150 Stores After Court Approves Restructuring Plan
Private equity owners Modella Capital secure approval for a plan to save the former WH Smith chain from collapse by renegotiating rents.
The former WH Smith high-street chain, now trading as TG Jones, has received court approval for a restructuring plan that could lead to the closure of up to 150 stores. Modella Capital, the private equity firm that acquired the retail arm last year for £40 million, believes the plan is crucial to prevent the company's collapse.
The High Court has granted Modella Capital permission to implement measures that will allow some TG Jones shops to pay reduced rents to landlords. However, the company's lawyer indicated in court that the "working assumption" is that approximately 150 of its 480 stores will close. These closures are anticipated to occur if landlords refuse to accept the proposed reduced rent rates and opt to terminate the leases instead.
Under the approved proposals, 122 stores will be exempt from rent payments for a period of three years. Lawyers for the business cited a "long-term sales decline," exacerbated by high employment costs and increased competition from online retailers, as reasons for the company's "highly distressed" financial state.
Modella Capital is set to inject an additional £15 million into the business, following a previous £10 million loan provided in April. The company had faced the prospect of administration if the restructuring plan had not been enacted by July 31.
TG Jones has not yet specified the number of staff who may be made redundant, as this will depend on which stores can continue operating under the new rental agreements. The company currently employs around 4,700 people.
Alex Wilson, chief executive of TG Jones, stated that the court's approval "means we can now move ahead with our turnaround." He added, "We will now be fully focused on investing in our stores, offering customers better value and service and supporting colleagues through the change ahead. There is a lot of work to do and some of the decisions we need to make won't be easy. But today's outcome means we can now focus on delivering the plan."