A rescue deal for British household goods company Wilko has collapsed, administrators said Thursday, once more placing thousands of jobs at risk.
After soaring inflation pushed Wilko to the brink, London-based M2 Capital bid almost £90 million to take over the company, which has 400 stores and employs about 12,500 staff.
However that deal has collapsed and administrators PwC said only parts of the business now had a chance of being saved, resulting in the first job losses which will total close to 300.
"It's with great sadness that we announce these redundancies," said Jane Steer, acting for the administrators called in to find a buyer.
"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," she added in a statement.
PwC said all stores remained open.
The British Independent Retailers Association (Bira) said Wilko's demise will cast a 'big shadow' on the high street, as it called on the administrators to do everything within their power to help it continue to trade.
Bira said the announcement that administrators are to begin making redundancies from its head office, distribution centre and support centres this week and next will be a hard blow for the already struggling high street.
“Today marks a somber day for the high street and the communities it sustains,” Andrew Goodacre, Bira chief executive, said.
“The impending loss of hundreds of jobs at Wilko is not just about numbers on a balance sheet; it signifies the displacement of dedicated employees who have contributed to these stores' vitality. The closure of these retail spaces will undoubtedly leave a significant void in our high streets and it leaves a big shadow over our towns and cities.
"There is clearly an interest for the stores and if more time is needed for parties to be able to buy the stores, then we must do that. These are prime sites on high streets and we call on the administrators to do absolutely everything needed to be done to sort a deal. If that means more time than so be it."
The privately-owned company has filed a notice of intention to appoint administrators early in August after it failed to find emergency investment.
Despite a last-minute bid by M2 Capital, which aimed to salvage the situation, the hopes of saving these jobs were dashed as the private equity firm's offer fell short of meeting PwC's stringent due diligence criteria.
The administrators made the decision to initiate redundancies starting from 4 September. A total of 269 employees at the retailers support centre in Worksop are to be made redundant on Monday, and the two distribution centres in Worksop and Newport are expected to be announced early next week ,with the total number of jobs at risk being 1,300.
The GMB union, which represents almost one-quarter of Wilko employees, said the interested party had "failed to provide the necessary evidence to show that they had the finances necessary to purchase the company".
The company, founded in 1930, is headquartered in the town of Worksop, central England.
British customers and businesses continue to face soaring costs, with UK annual inflation at 6.8 percent, the highest among G7 countries.
In a bid to cool price rises, the Bank of England has raised its key interest rate 14 times in a row since the end of 2021, to 5.25 percent, a 15-year high.
That has helped cut the inflation rate from a 41-year peak of 11.1 percent in October last year.
Goodacre added: “If it does collapse then this is a stark reminder that the cost of living crisis affects all facets of the high street, from large retailers to small businesses. This event underscores the challenges faced by businesses of all sizes and underscores the urgent need for reform in business rates, a critical step towards ensuring the survival of our high streets.”
(With inputs from AFP)
