Wilko in need of over £70m in potential rescue deal

The prospective buyers of Wilko, the discount home goods retailer that is facing permanent closure, will have to invest upwards of £70m to rescue the business, The Times has reported. 

This comes as PwC, which is advising the retailer, is reportedly in talks with other rival discount retailers and two private equity firms in a bid to find a buyer so that Wilko can avoid collapse. 

It is understood that while Mike Ashley’s Frasers Group and Hilco are lenders to Wilko, they are not in talks to buy the company. 

According to The Times, the large sum of money needed to be invested in Wilko has raised questions whether it will be possible to secure a solvent sale of the business. 

Between £25m to £30m of the funds is needed by the company to get stock flowing in its stores, while an additional £40m would be used to pay off debts to Hilco, although the firm is willing to continue lending to the retailer.

Last week, Wilko filed a notice of intention to appoint administrators, with CEO Mark Jackson urging interested buyers to “move as fast as possible” to secure a solvent sale. 

In a statement last week, Jackson also said: “While we can confirm we’ve had a significant level of interest, including indicative offers that we believe would meet all our financial criteria to recapitalise the business, at present, we don’t today have an offer that provides the necessary liquidity in the time we have available. 

“We continue to believe that our robust turnaround plan, with significant re-stabilisation cost savings in progress, will deliver a profitable wilko and maximise the significant opportunities that we know exist.” 

He added: “That said, while we’ll continue to progress these indicative offers, without the surety of a recapitalisation being able to be completed within the necessary time frame and given the cash position, we’ve been left with no choice but to take this action.”