Wilko is seeking a new injection of cash as it prepares to launch a restructuring process aimed at cutting costs.
The home and garden retailer is seeking new equity to support its planned company voluntary arrangement (CVA), in which it aims to secure rent cuts from landlords.
The family-owned business has been preparing to launch the CVA, which is required to save it from falling into administration, for a number of weeks.
Wilko CEO Mark Jackson said the company was also now seeking to recapitalise.
“As directors, we continue to work through all the options available to the business, and in addition to the work we’re doing to streamline costs and transform the way we operate, we’re also now actively exploring opportunities to recapitalise the business and provide a stable platform to activate the next phase of the recovery, with a plan to maximise the significant opportunities that exist to re-establish a profitable Wilko,” he said.
Wilko recently secured a £40m two-year revolving credit facility with lender Hilco UK, which owns Homebase.
Its hunt for new equity, first reported by Sky News, could result in the owning Wilkinson family selling a minority stake. Wilko is being advised by PwC in talks with turnaround investors.
Wilko had been expected to seek rent savings on about 250 of its 400 stores in its CVA. The company recently said it was planning no closures as part of the process.
However, landlords were expected to reject the CVA terms, which for some of them included foregoing rent for three years. One retail property source told The Grocer the proposal was “madness” with “no chance” of securing landlords’ agreement.
In January, Wilko launched a turnaround programme aimed at slashing costs, including axing 150 assistant store manager roles while reducing the hours of team supervisors in 150 stores, equivalent to a further 150 full-time job losses. A number of head office roles were also shed.
The cost-cutting comes alongside plans to grow sales through an omnichannel strategy.
There have also been a number of recent changes to Wilko’s senior leadership team, including the appointment of Jackson as CEO and the stepping aside of major shareholder Lisa Wilkinson as chair, to be replaced by Chris Howell.
Jackson said: “We’ve been open with all our stakeholders including our team members that Wilko is considering options to accelerate its turnaround plan, given that we need to make significant changes to the way we operate to stabilise our business.
“We’re a £1.2bn turnover business with a strong presence on UK high streets through our 400 stores, online at wilko.com and through our great-value Wilko own-brand products, serving local communities with their everyday household and garden needs for over 90 years.
“I joined the business in January alongside our new chair, bringing experience in retail turnaround situations. Since then, we’ve been working with our newly refreshed and streamlined senior team and, with the help of retail advisers and experts, have been facing into our past mistakes and seen real progress against many areas of our plan.
“Over the past five months we’ve made significant savings across our cost base and have been considering various options based on advice given regarding our store costs.”
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