Wilko could be saved from closure with potential rescue bid lined up

As homeware and hardware retailer Wilko is on the brink of collapse, a potential rescue bid could save the chain from complete closure.

The CEO of the homeware and hardware retailer said it is expected to enter insolvency after failing to secure a takeover to help the business with ‘mounting cash pressures’.

Wilko filed a notice of intention to appoint administrators at the High Court last Thursday, August 3rd. 

A notice of intention protects businesses from creditors for 10 days as the company attempts to secure its finances.

Around 12,000 jobs could be at risk with Wilko’s 400 stores across the UK facing possible closure.

However, the chain could be saved by a potential rescue bid from a specialist investor.

Gordon Brothers, which specialises in struggling retailers and has backed British high street names including Laura Ashley, are in talks with Wilko’s advisers about making a possible deal.

If a deal was to go ahead, it could still involve a large number of store closures and job losses. However, an insider source has said that the chances of the deal being made were ‘relatively low’.

One source reportedly said the firm had expressed an interest in partnering with other financial investors to inject about £20m in equity, while it would provide around £50m in debt financing.

The project is being overseen by Mark Newton-Jones — former executive for Next, Very Group and Mothercare — who was appointed to lead Gordon Brothers’ European operations earlier this year.

Alteri and Opcapita, two other specialist turnaround investors, have also been examining offers for Wilko in recent weeks but are regarded as unlikely to do so ahead of an insolvency process.

PriceWaterHouseCoopers (PwC) — advisors for the family-owned retailer — is understood to be seeking binding offers within days, with the company close to running out of cash.

Earlier this year Wilko’s hired advisers from PwC in a bid to find a buyer iso they could secure fresh funding to try to keep the firm trading.

If appointed as administrators, PwC, will run a further sale process before beginning a liquidation of Wilko’s assets — if no deals can be arranged.

This year Hilco, owner of Homebase, lent Wilko £40million to try to salvage the company’s future. The firm also recently amended the terms of their agreement to continue to help the struggling chain.

Over the past year, Wilko has closed down 14 different stores across the UK.

The stores that have been recently shut down are Bournemouth, Stockton, The Fort Birmingham, Shipley, Scunthorpe, Narborough Road in Leicester, Grantham, Redditch, Rotherham, Skegness, Llanelli, Merthyr Tydfil, Cleethorpes and Woolwich.

As the news was announced last week Mark Jackson, Wilko chief executive, said: “We’ll continue to progress discussions with interested parties with the aim of completing a transaction which preserves the business and will encourage those interested parties we’re in discussions with to move as fast as possible.

“We continue to believe that our robust turnaround plan, with significant re-stabilisation cost savings in progress, will deliver a profitable Wilko and maximise the significant opportunities that we know exist.”

Wilko has been owned by the Wilkinson family, which established the business, since 1930.