TG Jones owner Modella Capital has secured high court approval for a restructuring deal which could see up to 150 UK stores close.
In addition to the store closures, 120 landlords will receive no rent for up to three years and rent will be cut on hundreds of other stores by between 15% to 75%.
Modella Capital bought WH Smith’s former high street business last year and rebranded it TG Jones. The chain currently operates 451 stores nationwide and the restructuring deal could see its portfolio of UK stores reduced to 302.
The business, which blamed challenging retail conditions coupled with its inability to retain the WH Smith brand name on its poor trading, had to make a number of concessions to push its restructuring plan through after landlords including British Land described its initial proposal “fundamentally unfair”.
Alex Willson, CEO of TG Jones, said: “We welcome the court’s approval of our restructuring plan. This decision allows us to move ahead with our turnaround strategy. The plan protects the substantial core of the store estate and makes TG Jones a stronger, more sustainable business. We are incredibly grateful to all the colleagues, partners and stakeholders who engaged constructively throughout the process, and to Modella Capital for its continued financial commitment.”
In response to the news, Ion Fletcher, director of policy, Real Estate:UK, said: “We support a corporate rescue culture, but restructuring plans can be used to force through changes that go further than is needed to save the business, thereby transferring value from property owners to the shareholders of proposing businesses.
“This case highlights how it is possible to make restructuring plans fairer when proposers and creditors talk to each other – it’s a shame that it took a formal objection in court to force that conversation, which should have happened ahead of the plan being launched. We need new guidance to better promote proper engagement with landlords and other creditor groups and ensure those that bear the cost of a restructuring get a meaningful share in any upside if and when the business returns to profitability.”
