The long-awaited restructuring plan for TG Jones, formerly known as WH Smith, has finally gained High Court approval. This decision will seal the fate of up to 150 struggling stores across the UK, leaving thousands of employees uncertain about their job security in the coming months. The move, aimed at stabilising the retailer's finances, is part of a broader strategy to transform TG Jones into a more robust and sustainable business model.
The company, which boasts an impressive 450-strong store estate and approximately 5,000 staff members, was acquired by private equity firm Modella Capital in a significant deal last year. Following the takeover, the retail chain underwent a rebranding exercise, resulting in the current TG Jones nameplate. Industry insiders had warned that failure to secure court approval for the restructuring plan could have led to administration, highlighting the gravity of the situation.
The approved plan encompasses a comprehensive debt write-off of amounts owed to suppliers and a substantial reduction in rent for numerous landlords. Alex Willson, Chief Executive of TG Jones, expressed his satisfaction with the court's ruling on Wednesday, stating that it will enable the company to drive its turnaround strategy forward. Notably, he emphasised that the plan is designed to safeguard the majority of the store estate.
Landlords overseeing the retailer's most profitable stores overwhelmingly supported the deal, with a resounding 80% vote in favour last week. However, other landlord groups, which will face considerable rental reductions under the plan, largely opposed it. Despite some creditor groups voicing their concerns, the plan was able to proceed once it gained approval from 75% or more of one class of creditors and received the High Court's backing.
Support for the plan was mixed among different creditor classes, with only 72% of business rates creditors – predominantly local councils – endorsing the proposal. In contrast, less than a third of general creditors, including card manufacturers and pen brands, gave their approval. It is worth noting that no landlords owning stores earmarked for closure or those facing zero rent under the plan supported the deal. Small suppliers, such as those providing cards and toys, are expected to lose at least half of the money owed to them by TG Jones in the wake of the restructure.