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Judge warns TG Jones turnaround plan faces very considerable risks
As part of the approved restructuring, TG Jones will shut 150 of its 450 stores, and a judge said the company’s £3m valuation versus roughly £40m acquisition value reflects execution risk.
A UK judge cast doubt on the prospects for TG Jones, the former WH Smith high street business that was rebranded after a private equity takeover, warning that its turnaround plan carries very considerable risks, The Guardian reports.
In a judgment published Wednesday, Mr Justice Hildyard, who approved the rescue plan in July, said the effort looked like “an adventurous equity play” and noted that the turnaround approach “might strike the sceptic” as more aspirational than grounded in confidence. He said, “The execution risk is very considerable,” citing the company’s £3m valuation compared with an acquisition value of about £40m a year earlier.
Under the approved restructuring, TG Jones will close 150 of its 450 stores. The judge approved the plan despite his scepticism, The Guardian says, because Modella Capital, which invested to support the turnaround, put in new funding.
The Guardian adds that TG Jones, which previously employed about 5,000 staff, was bought last year by Modella Capital, and the retailer has already bought Flying Tiger, a Danish chain operating about 1,000 stores worldwide. Modella had warned it could seek administrators if the restructuring plan, including writing off debts to suppliers and cutting rent for many landlords, was not approved.