News has broken that WH Smith could be on the way to incurring further losses from its deal with Modella covering its non-travel retail site retail business.
Modella had paid £10m of the £42m it had agreed to pay to WH Smith, after it had whittled down the original £76m it had negotiated, and which Modella claimed was the consequence of a worsening of trading conditions. This left an outstanding £32m balance, contingent on the former WH Smith high street retail business generating positive cash flow. This is now understood to be at risk.
Modella is seeking to to restructure with the intention of closing up to 150 TGJones shops with the pledge to return them to profitability through further investment of c.£35m. According to reports, Modella is also said to have approached WH Smith to request support for the funding of redundancy payments to former WH Smith staff affected when TGJones stores are closed.
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