Buyers interested in Wilko will need to pump £70 million into the business in the next two weeks to keep creditors at bay after the discount retailer was forced to enter administration last week.
PwC, acting as advisers to Wilko, initiated discussions with a rival discount chain and two private equity firms for a potential rescue deal via a company voluntary arrangement (CVA), which would involve significant rent reductions at 400 stores, reports from the Sunday Times revealed.
However, as the required capital injection is high it raises concerns about the feasibility of a solvent sale that could protect Wilko’s workforce of 12,000.
A potential buyer must inject £25 million to £30 million to resume supplies to Wilko's stores and £40 million to settle a debt owed to Hilco, with the restructuring firm's willingness to continue lending offering a glimmer of hope.
Engaging with the Pensions Regulator, Wilko's defined-benefit scheme, which has been closed since 2013, carries a £50 million deficit on a buyout basis.
Neither Mike Ashley's Frasers Group nor Hilco are reported to be pursuing control.
Should no viable buyer emerge, the possibility of a pre-pack administration, leading to store closures, looms, and in a worst-case scenario, store shutdowns and stock liquidation might be the ultimate outcome, resulting in minimal returns for unsecured creditors such as landlords and suppliers.