Wilko: Gordon Brothers ‘in talks’ to save struggling high street retailer
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An investor which specialises in struggling retailers is reportedly exploring the chance to save Wilko from going bust.
The homewares retailer announced it was filing a notice of intention to appoint administrators last week, putting 12,500 jobs at risk.
However, Gordon Brothers, which has rescued other British high street names, including Laura Ashley from collapse, is in talks with Wilko's advisers about structuring a potential deal, Sky News reports.
Sources have told Sky News that an offer could involve Gordon Brothers providing funding to Wilko to implement a restructuring which would involve a significant number of job losses and store closures.
However, insiders told Sky News that the chances of Gordon Brothers reaching a deal to rescue Wilko were "relatively low".
Last week, The Times reported that any buyer would need to pump in £25m to £ 30m to get supplies moving into Wilkos shops again, and an additional £40m is needed to pay off onerous debt owed to Hilco.
Wilko started from a single hardware store in 1930. It secured a £ 40m lifeline from Hilco UK, the owner of Homebase, at the beginning of this year, and also closed departments including children’s toy aisles in a bid to cut costs.
Last week, Wilko chief executive officer Mark Jackson said: “While we can confirm we’ve had a significant level of interest, including indicative offers that we believe would meet all our financial criteria to recapitalise the business, at present, we don’t today have an offer that provides the necessary liquidity in the time we have available, given the mounting cash pressures we’re faced with.
“Unfortunately, with this in mind, today we’re having to take the difficult decision to file a notice of intention.
‘We’ll continue to progress discussions with interested parties to complete a transaction which preserves the business and will encourage those interested parties we’re in discussions with to move as fast as possible.”
One source told Sky News the Gordon Brothers had expressed an interest in partnering with other financial investors to inject about £20m of equity, while it would provide around £50m in debt financing.
PricewaterhouseCoopers is advising Wilko and is thought to be seeking binding offers within days, with the company close to running out of cash.