TG Jones, the company formerly known as WHSmith, is set to close 150 stores across the UK following a restructuring plan that has been approved after a takeover deal. The plan, which faced opposition from landlord British Land, has been revised with concessions, leading British Land to withdraw its objection and abstain from voting.
Takeover deal and store closures
The restructuring proposal, backed by Modella Capital, which owns TG Jones, could result in the closure of 150 stores. The exact locations have not been disclosed. The plan was reportedly on the brink of collapse before the takeover deal passed, putting thousands of jobs at risk.
Modella Capital made several concessions, including removing a proposal to stop paying rent at some locations. British Land, which owns six TG Jones stores, initially opposed the plan but agreed to abstain after the concessions.
Creditor and landlord reactions
An unnamed creditor told Sky News that the proposal "presupposes that the company will have sufficient cash in three years to pay an upside at all while the business will still have to repay its debts." The creditor also called the decision to pay 12% over base rate for the Modella-owned TG Jones name "bizarre," adding: "It is bizarre that they agreed to pay millions of pounds for a completely unknown brand in the first place."
British Land issued a statement saying: "Following detailed discussions with TG Jones over the last few days, and a number of material concessions made by the company to mitigate unfairness caused to landlords, British Land has agreed to withdraw its objection to the plan, and will abstain from voting." The statement noted that the revised proposal includes rent reductions for Class A and B stores being repaid after three years, with security guarantees and a share of 50% of the company's EBITDA not reinvested in the business.
Investment and job impact
Modella has pledged a £35m investment into the business if the deal goes through. The company claims that around 5,000 jobs would be lost if the proposal were rejected, due to an administration period.
A TG Jones spokesperson said: "We are aware of suggestions made by a small number of landlords in connection with the Restructuring Plan. We have engaged constructively with these landlords, as we have with other creditors across the estate. As a result of that engagement, we have improved the terms of the Plan to reflect feedback received. We believe these improvements demonstrate our commitment to achieving a satisfactory outcome for all stakeholders."
