TGJones, the rebranded WHSmith high street business, is nearing a refinancing of debt facilities, it is understood.
The refinancing of TGJones, owned by investor Modella, is expected to precede a restructuring that will include shop closures and redundancies, Sky News has reported.
Modella has been in discussions with a variety of potential financiers who would replace Secure Trust Bank as a lender. Footasylum owner Aurelius was reported to be the most likely candidate. The debt facility is thought to be worth between £40m and £50m.
One person familiar with the situation told Sky that the refinancing was vital because a formal restructuring plan for TGJones is being drawn up urgently.
The retailer is thought to have been trading poorly since the start of this year, and a restructuring plan is likely to lead to the closure of approximately 100 branches and the imposition of big rent reductions on other stores.
The Post Office, which operates in many TGJones stores, is said to have indicated its support of the plans.
Teneo and law firm Slaughter & May are advising on the restructuring plan – a mechanism deployed recently by other retailers, including Poundland and River Island.
Other Modella-controlled retailers have also hit trouble in recent months. Both Claire’s and The Original Factory Shop fell into administration, although a French retail entrepreneur now intends to re-open Claire’s in the UK.
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