The new owner of WH Smith’s high street chain has effectively been barred from launching a wave of mass store closures for at least 12 months amid plans for rapid restructurings at two other retailers it owns.
Sky News has learnt that WH Smith would have the right to cancel a year-long transitional services agreement (TSA) put in place with Modella Capital – which struck a deal to acquire the business in March – if it launched a company voluntary arrangement (CVA) before the first anniversary of the transaction’s completion.
The clause in the TSA, which enables Modella Capital to continue using WH Smith’s systems after it takes ownership, is significant, according to retail insiders.
WH Smith agreed to sell its 480 high street shops to Modella in a £76m deal, ending 233 years of high street history.
Modella plans to rebrand the chain under the name TG Jones after it takes control.
In recent weeks, Sky News has revealed plans drawn up by Modella to launch CVAs at both Hobbycraft and The Original Factory Shop, which it has owned for nine and three months respectively.
Both of those restructuring processes have put significant numbers of stores at risk, and industry executives say that, over time, a sizeable part of the WH Smith high street estate could also be at risk.
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A spokesman for Modella said: “We have a number of exciting plans for the future of TGJones.
“A CVA is not on the agenda, as it is a solvent business.”
WH Smith, which will become a pure-play travel retailer once the Modella deal completes, declined to comment further ahead of the completion of the sale.
