Job cuts at Wilko’s head office and warehouses are to begin on Monday after a surprise £90m bid for the discount retailer fell through.
Almost 270 jobs at the group’s head office in Worksop in Nottinghamshire will go on Monday with more job cuts to follow at its distribution centres there and in Newport, south Wales, next week. Kin, the group’s in-house product development arm, is also being closed with the loss of 14 jobs.
It is understood that about a third of the 1,400 staff at the group’s headquarters and distribution centres are to be made redundant in the next few weeks after talks with private equity firm M2 Capital collapsed because of a failure to provide proof of funding to Wilko’s administrators at PwC.
Jobs to go on Monday include those in the commercial trading team and IT, finance, legal and human resources, according to the GMB union which represents thousands of staff at Wilko.
Talks on a rival bid from the HMV owner, Doug Putman, continue. It is understood that he does not want to hold on to Wilko’s back-office function, only the brand and its stores.
Robert Mantse, the head of M2, said he had offered to team up with Putman and had done all he could to meet PwC’s deadline to provide details of the funding behind his bid by Thursday morning because “the i is silent in M2, we do Mission Impossible”. It is unclear whether Putman responded to Mantse.
M2 is a little-known Anglo-Canadian finance group that claims to have set up funds to buy hotels and car parts makers but has yet to complete any deals. It is the only bidder that has pledged to take on Wilko’s support staff as well as its shops. However, questions have been raised about the credibility of the offer and M2 has not satisfied administrators that it has the necessary backing.
Mantse responded to questions about M2’s credibility: “Money talks and bullshit walks.”
Mantse, who worked for PwC as an expert in Russian metals and mining mergers and acquisitions, said he was lining up £150m to support a takeover of Wilko but did not have enough time to finalise details of the package.
M2 had also claimed it was in discussions about financing the deal with Michael Flacks, an entrepreneur who owns a diverse array of businesses including the US retailer Kelly-Moore Paints and the skin-brushing brand No Nonsense Beauty. Flacks also once looked at buying the British brand Laura Ashley.
However, Flacks told the Sun he had only heard from M2 this week: “I replied saying I have no interest in Wilko and I don’t back anyone’s business,” he told the newspaper.
The M2 bid, which was put forward very late on the final day for offers on Friday and included a 20% stake in the business for employees.
Almost 12,500 jobs are at risk after Wilko called in administrators this month as it ran short of cash.
Jane Steer, a joint administrator, said: “It’s with great sadness that we announce these redundancies. We’re incredibly grateful to these team members for the support and dedication they’ve shown to the company, particularly over the last few very difficult weeks.
“We will continue to do all that we can to support staff through this period of difficult upheaval, and to maximise their opportunities for a rapid return to work.”
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In an update to Wilko staff, the GMB said news of the redundancies was “obviously devastating for our colleagues in the support centre and the distribution centres.”
“We will do everything we can moving forwards to support you and wish there had been a better outcome. Despite leaving no stone unturned, we simply could not reverse the years of mismanagement under the recent regime and cannot ignore the incompetence which has cost you your jobs,” the union said.
Putman’s offer does not include the retailer’s head office and warehouse, but would include more than 200 of its 400 shops, possibly protecting up to 10,000 jobs.
The Canadian tycoon’s family also owns Everest Toys, the largest toyand games distribution company in North America, and Toys R Us in Canada. He is expected to combine Wilko’s operations with HMV and his toy business if his bid is successful.
If Putman’s bid falls through, Wilko’s stores are expected to be bought by rival retailers in the value market such as Poundland, Home Bargains, Primark and B&M, which would likely rebrand them and may not retain existing staff. Landlords of some sites may also decide to divide up the space.
Property experts said any individual retailer was unlikely to take more than 50 of the Wilko stores.
Administrators are legally bound to try to secure the best deal for creditors, who are led by the restructuring specialist Hilco, which is owed about £40m, and Barclays Bank, which is also owed several million pounds.
Putman’s bid would enable Barclays and Hilco to be paid off, as it would leave administrators with more than £40m of property assets, including a warehouse and the head office, while offering a small additional amount to other creditors.
