Up to 100 TG Jones stores, rebranded from WH Smith, could shut as the private equity financiers who run nearly 500 former WH Smith stores have delayed announcing an “aggressive” restructuring. Modella Capital, the Mayfair equity firm which runs hundreds of the stationer’s former stores, has run into financial difficulties and was due to unveil rescue proposals last week.
Background of the Acquisition
The equity firm bought WH Smith’s 480 high street stores for £40m in June last year, and has rebranded many of its locations as TG Jones. However, Modella’s ownership of the stationary giant has been mired in uncertainty, amid reports that the stores which have lost the WH Smith name are performing worse. The owners enlisted crisis advice from consultancy Teneo and law firm Slaughter and May, and is reportedly preparing for a drastic restructuring which could close up to 100 stores.
Legal and Financial Maneuvers
Modella will engineer a “cram-down” – a novel measure which can allow firms to push ahead with a restructuring with the consent of only one class of creditor, according to the Sunday Times. TG Jones needs a High Court judge to approve this restructuring, and will have to prove that this is the only way to prevent the business falling into administration. The plan will reportedly saddle many landlords with steep rent cuts, and TG Jones is expected to face pushback. “This is really aggressive stuff,” one City source told the Sunday Times.
TG Jones had planned to unveil the restructuring last week but ended up delaying the announcement at the last minute. Modella Capital has snapped up a string of high street retailers in recent years, often offloading the acquisitions soon after purchase.
Other Modella Capital Ventures
The Original Factory Shop shut all of its 137 stores last week, after the budget department store was put into administration less than two years after being bought by Modella. The equity firm is reportedly weighing a sale of Wynsors World of Shoes, a northern shoeseller it acquired just four months ago. Modella was formed as Tailer Debtco in 2022 before being renamed to Modella a year later, and is owned by Hay Wain Group, the family office founded by turnaround specialist Jamie Constable. Modella held £12.8m in net assets in 2024, according to its most recent balance sheet.
Impact on WH Smith
WH Smith – which retained its stores in airports, hospitals and train stations in the deal with Modella – is preparing to take a profit hit. The retailer is more reliant on its airport stores since losing its high street locations, and the firm said on Thursday it is suffering from the slowdown in international tourism caused by the Iran war. Shares in WH Smith tumbled after it said it is adopting a “more cautious outlook,” citing a £25m pre-tax loss in the six months to February and forecasting a lower profit for the coming year.
