One of the two remaining bidders for WH Smith’s high street empire is exploring a restructuring of Hobbycraft, the crafts chain it bought just seven months ago.
Sky News has learnt that Modella Capital has drafted in advisers from FRP, the professional services firm, to examine potential options including a company voluntary arrangement (CVA).
CVAs – a widely used tool in the retail and hospitality sectors in recent years – are frequently utilised to facilitate store closures and rent cuts from landlords.
Sources close to the Hobbycraft process said on Wednesday that FRP’s work was at a very early stage, and that no decisions about restructuring measures had been taken.
It remained possible that no substantive action would be implemented, they added.
A spokesman for Modella said that Hobbycraft traded from 124 stores and had a workforce numbering roughly 2,400 people.
Modella, which specialises in buying challenged retailers, is vying with rival firm Alteri to buy WH Smith’s entire high street estate, with a deal expected in the coming months.
The firm’s executives have backed chains including Paperchase and Tie Rack, and the firm last month acquired The Original Factory Shop.
Modella bought Hobbycraft, which was founded in 1995, from the private equity firm Bridgepoint last summer.
A spokesman for Modella declined to comment on the options it was exploring, while FRP also declined to comment.
