UK-based hardware retailer Homebase is set to close approximately 80 of its stores, affecting up to 1,000 employees, according to The Guardian, though UK-based Retail Gazette puts the number of affected employees at closer to 2,000.
The struggling chain is expected to file a company voluntary arrangement, with the process handled by Alvarez & Marsal, an adviser on corporate insolvencies.
Hilco Capital, an investment firm that specialises in distressed businesses, purchased the chain from Wesfarmers for a nominal sum earlier this year after what Wesfarmers managing director Rob Scott called a “disappointing” investment.
“[While] the business is capable of returning to profitability over time, further capital investment is necessary to support the turnaround,” said Scott.
“The materiality of the opportunity and risks associated with turnaround are not considered to justify the additional capital and management attention required from Bunnings and Wesfarmers.”
Wesfarmers said the deal would record a loss of between $350 to $406 million after purchasing the business just two years ago, but that it would remain eligible for 20 per cent of equity that arises should Hilco sell Homebase in the future, allowing for a possible profitable divestment in the longer term.
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