Hilco, the specialist retail investor that owns Homebase, has agreed to provide approximately £5m ($6.4m) in additional funding to Wilko, the general merchandise chain, as it faces an intensifying cash squeeze.

This new debt comes in addition to a £40m loan Wilko secured from Hilco earlier this year.

The move highlights Hilco's commitment to supporting the family-controlled retailer as it strives to find a long-term solution to its financing challenges.

Wilko explores change of ownership amid looming cash crisis

Last week, Sky News revealed that the Wilkinson family, who founded Wilko in 1930, is considering a change of ownership for the first time due to the imminent risk of running out of cash within weeks.

In response to this crisis, large general merchandise chains have been approached to potentially recapitalise the business, which could lead to the family relinquishing majority control.

PwC initiates discussions with financial investors for complex restructuring

Wilko currently employs around 12,000 people and operates from 400 stores, making it one of the largest privately owned retailers in the UK.

PricewaterhouseCoopers (PwC), the company advising Wilko, has already started talks with prospective financial investors to raise new equity for the business.

This funding is intended to support the company through a complex restructuring process and help stabilise its operations.

Wilko faces administration without urgent financial support

The company has been grappling with inflationary pressures and supply chain challenges. As a result, has been working on finalising a company voluntary arrangement (CVA) that would result in substantial rent cuts for hundreds of stores.

However, the chances of launching a CVA have diminished significantly as Wilko desperately seeks new funding. Without securing the necessary financial backing, the company is at risk of falling into administration by the end of August.

Wilko CEO Mark Jackson responded to reports about additional cash lending, stating that such suggestions were incorrect.

He reiterated that the company is actively exploring a re-capitalisation, which is still ongoing, as previously confirmed in statements to Sky News.

The CEO expressed optimism about exploring all available options to rebound as a business and capitalise on existing opportunities.