- Wilko seeks capital injection and rent reduction agreement
- Working with advisors to raise new equity funding
- Potential dilution of Wilkinson family’s ownership stake
As it negotiates rent reductions with landlords, the general merchandise company has approached turnaround funds for funding.
Wilko, one of the UK’s top bargain retailers, needs capital to restructure its finances.
Wilko, which is owned by its founding family and employs approximately 12,000 people, is working with advisors to raise tens of millions of pounds in new equity in the coming weeks.
The search for additional funding occurs as the chain nears completion of a company voluntary arrangement (CVA) – a mechanism that would result in significant rent reductions at hundreds of stores.
Wilko approached various financial investors for funding to support its CVA bid this week, city sources said Friday.
The company and PricewaterhouseCoopers (PwC), which is supervising the proposed restructuring, are in discussions with a variety of turnaround investors accustomed to providing capital in similar situations.
It is anticipated that any new equity financing will dilute the Wilkinson family’s ownership stake in the company.
Although all options were open, one insider predicted a minority stake sale.
Wilko has been working on a CVA, and none of its 400 UK stores are expected to close.
One landlord warned that the company would certainly go bankrupt without new investment.
The landlord stated, “A CVA is required to safeguard the company’s future.”
Wilko also obtained £40 million in financing from Hilco UK, the retail investor, and lender that owns Homebase.
However, it is understood that equity rather than debt is required for new funding.
Before negotiating with landlords to lower retail leases, it hired CBRE property experts.
Wilko’s chief executive, Mark Jackson, stated, “As directors, we continue to evaluate 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 now actively exploring opportunities to recapitalize the business and provide a stable platform to activate the next phase of the recovery, with a plan to maximize the significant opportunities that exist to re-establish a profitable Wilko.
