Modella Capital plans major restructuring for Original Factory Shop

In the UK, Modella Capital has initiated a significant restructuring plan for The Original Factory Shop, which it acquired just weeks ago. Sky News reported that Modella is collaborating with Interpath, a consulting firm, to explore a company voluntary arrangement (CVA). This restructuring aims to identify underperforming stores for closure and negotiate rent reductions for remaining locations. As part of the process, Modella will also evaluate the operations of a major distribution centre associated with the chain. The Original Factory Shop, which was founded in 1969, faced challenges that were exacerbated during the COVID-19 pandemic. Its previous owner, Duke Street, had invested over £10 million to navigate the tough economic climate and ultimately sold the business to Modella without any remaining bank debt. The chain has approximately 1,800 employees, and if the proposed CVA leads to store closures, job losses could follow. The restructuring plans come at a time when Modella is actively involved in multiple deal-making ventures, including competing for WH Smith's high-street arm alongside Alteri Investors. Furthermore, Modella is pursuing plans to restructure the Hobbycraft chain, which it acquired the previous summer. Given the challenging market conditions, there is speculation about other bidders interested in TOFS, including Baaj Capital, Mike Ashley's Frasers Group, and Poundstretcher. As details emerge regarding the timetable and specifics of the CVA, the situation appears to be evolving rapidly. The interested parties and stakeholders are closely monitoring the developments, particularly as they relate to employment implications for the workforce at TOFS and the broader retail landscape in the UK.