A sweeping rescue deal for TG Jones, the retail chain formerly known as WHSmith High Street, has received High Court approval, paving the way for the closure of up to 150 stores. The restructuring plan, sanctioned this week, is designed to safeguard the future of the business, which was reportedly on the brink of insolvency. Modella Capital, the owner of TG Jones, stated that the measures are critical for survival amidst challenging retail conditions.
The plan will see significant changes to the company's property portfolio. Beyond the closures, hundreds of remaining stores will face substantial rent reductions, ranging from 15% to 75%. Furthermore, approximately 120 landlords are set to receive no rent for a period of up to three years. These drastic steps underscore the severe financial pressures faced by the retailer, which employs around 4,700 staff across its 451 current locations.
Modella Capital acquired the High Street arm of WHSmith last year, subsequently rebranding it as TG Jones. WHSmith's highly profitable travel stores, located in airports and railway stations, were not part of this deal and continue to operate under the original brand name. Less than a year after the acquisition, Modella announced the radical restructuring, citing a combination of long-term underinvestment by previous owners and the current difficult retail environment, exacerbated by the inability to retain the well-known WHSmith brand.
During the High Court hearing, it was revealed that TG Jones was facing a cash shortfall of nearly £8 million by the end of this week had the rescue deal not been approved. Tom Smith KC, representing TG Jones, described the business as "highly distressed" and "running on fumes." He informed the court that a £10 million loan from Modella and a deferral of liabilities, including a large tax bill from HMRC, had been necessary to prevent the company from running out of cash in April.
The restructuring plan faced considerable opposition, notably from property owner British Land, who initially labelled the proposals as "fundamentally unfair." However, Modella Capital introduced several concessions which ultimately led British Land to withdraw its objections. Many suppliers are also expected to incur significant financial losses as part of the agreement. The company forecasts that, depending on how many landlords choose to terminate leases rather than accept reduced rents, the business will stabilise with approximately 302 stores.
Mr Justice Hildyard, presiding over the case, approved Modella's plans, stating that his decision would be published in a summary. Alex Willson, Chief Executive of TG Jones, welcomed the court's decision, stating it would allow the company to move forward with its turnaround strategy, protect the core of its store estate, and create a stronger, more sustainable business.