TG Jones has been forced to offer a string of concessions to its landlords after proposals to slash rent in a bid to avert the collapse of hundreds of former WH Smith stores.

The retailer, formerly the high street arm of WH Smith, has convinced FTSE 100 landowner British Land to drop its opposition to its restructuring plan after a long-running tussle, City AM understands.

TG Jones’s plan for survival includes proposals to shut around 150 stores and impose steep rent cuts on the landlords of the remaining shops.

Commercial landlord British Land had led the opposition to these plans, dubbing them “fundamentally unfair” because owners of profitable stores would be forced to accept less rent.

The retailer sweetened its deal last week to no avail, with a spokesperson saying the plans remained “unacceptable”. 

But TG Jones has secured a last-ditch concession from the landlord just days before its restructuring goes to the courts for approval later this month.

TG Jones to pay back rent cuts

British Land said on Tuesday that it has agreed to withdraw its objection to the proposals and will now abstain from voting on them, as first reported by Sky News.

The landlord said that TG Jones has agreed to pay back rent reductions for some stores after three years and provide landlords with security to guarantee these payments.

The retailer has also offered landlords a 50 per cent share of future earnings if it does not reinvest in the business, British Land said.

The landlord said it decided to drop its opposition to the plans because the retailer’s proposal “is now materially different to the one originally advanced”.

But the firm landed a parting blow on TG Jones, saying that restructuring plans “should not be used to penalise landlords who are providing profitable stores at a fair market rent, all for the benefit of shareholders who won’t invest in the business themselves”.

‘Dangerous precedent’

A number of other landlords, including Land Securities and New River REIT, are still understood to be in opposition to the restructuring.

A person close to another of TG Jones’s landlords said that imposing rent cuts on the landlords of profitable stores would set a “dangerous precedent”. 

Landlords have been given “a bad rep” in this dispute, but have a responsibility to “make sure that we’re doing the best” for their pension fund investors, the person added.

TG Jones has run into a slew of difficulties in recent months, less than a year after private equity firm Modella Capital snapped up the 480 WH Smith stores for £40m.

Alex Willson, the chief executive of TG Jones, weighed into the debate with landlords over the weekend when he warned that the entire business would go bust if a deal was not reached.

A spokesperson for the retailer said: “We are aware of suggestions made by a small number of landlords in connection with the restructuring plan. We have engaged constructively with these landlords, as we have with other creditors across the estate.

“As a result of that engagement, we have improved the terms of the plan to reflect feedback received. We believe these improvements demonstrate our commitment to achieving a satisfactory outcome for all stakeholders.”