According to Sky News, the private equity firm is restructuring two other retailers it owns. But under an agreement with WHSmith, it cannot close stores for at least a year.
Experts told Sky News that WHSmith would have the right to cancel a year-long transitional services agreement (TSA) put in place with Modella Capital if it launched a company voluntary arrangement (CVA) before the first anniversary of the transaction’s completion.
WHSmith sold its UK high street business to Modella Capital in March as part of a £76m deal, in order to focus on higher-growth travel retail markets.
The WHSmith brand was not included in the sale and the group’s travel divisions continue to trade under the WHSmith brand across 32 countries, including at airports, hospitals and train stations in the UK.
Modella won the final stage of the auction process after the business was put up for sale in January. The firm took over 480 stores and 5,000 staff and announced plans to stop using the WHSmith name, with shops becoming TGJones instead.
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According to Sky News, the clause in the TSA that enables Modella Capital to continue using WHSmith’s systems after it takes ownership is “significant”.
The past few weeks have seen Sky News reveal plans drawn up by Modella to launch CVAs at both Hobbycraft and The Original Factory Shop, both of which it has recently purchased.
A spokesperson for Modella said: “We have a number of exciting plans for the future of TGJones. A CVA is not on the agenda, as it is a solvent business.”
