A lifeline has appeared on the horizon for struggling retail chain Wilko as private equity firm M2 Capital steps up with a £90m rescue bid.
The company, which recently entered administration, has been grappling with the imminent threat of 12,500 jobs and 400 stores hanging in the balance.
Amidst this crisis, M2 Capital has thrown its hat into the ring and has made a commitment to preserve all employees’ positions for a span of two years.
Initially brought to light by the Guardian, M2 Capital’s £90m offer is just one of the various proposals currently under evaluation by administrators.
PwC, the appointed administrators for Wilko, set a bidding deadline that expired last week and they are diligently reviewing all the incoming offers over the weekend.
Robert Mantse, the Managing Director of M2, expressed to the BBC that their bid’s acceptance would entail a two-year job security guarantee for Wilko’s workforce.
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The national secretary of the GMB union Andy Prendergast, responded to the news, emphasising the importance of preserving jobs, stating: “The devil is always in the detail… any bid that guarantees jobs has to be prioritised.”
Uncertain future for Wilko workers and stores
Adding to the mix, Canadian businessman Doug Putman, the owner of HMV, has also expressed interest in salvaging parts of the Wilko business. However, it remains unclear how many stores or jobs might be safeguarded should Mr Putman’s bid prove successful.
Administrators are tasked with weighing all offers, but their ultimate duty lies in acting in the best interests of the company’s creditors.
Wilko, renowned for its budget-friendly everyday goods, found itself struggling with substantial losses and a severe cash shortfall. Moreover, it fell behind competitors such as B&M, Poundland, The Range and Home Bargains, as rising living costs compelled consumers to hunt for bargains elsewhere.
Troubles at Wilko: a saga of financial struggles
Wilko had been navigating a challenging financial landscape by borrowing £40m from restructuring specialist Hilco, slashing jobs, restructuring its leadership team and offloading a distribution centre in an attempt to alleviate its cash woes.
Shoppers, too, had started noticing empty spaces on store shelves as Wilko encountered difficulties in paying suppliers, leading to the withdrawal of trade cover by at least one credit insurer and causing some companies to halt deliveries.
Lisa Wilkinson, the firm’s chairwoman until January of this year and the granddaughter of its founder, acknowledged that everyone had put forth their best efforts to salvage the business.
She emphasised that the entire team, suppliers and landlords had rallied together in this endeavour.
Wilkinson also addressed criticisms over dividend payments in recent years, asserting that the firm would have faced the same fate even without these payments, as proper governance and checks were in place.
However, Andy Prendergast criticised Wilkinson’s comments, stating that the workers were facing redundancy through no fault of their own.
He urged her to directly address the concerns of the employees, particularly in light of the uncertain financial future that many face.