U.K. home improvement chain Homebase said Aug. 14 that it expects to shut down at least 42 stores, putting about 1,500 jobs at risk, as part of a company voluntary arrangement proposal.
The move confirms earlier reports that the chain's new parent, private equity firm Hilco Capital LP, plans to launch a company voluntary arrangement, or CVA, for the retailer through restructuring adviser Alvarez & Marsal. Homebase said it is seeking approval from creditors on a proposed plan to cut its costs in the U.K. and Ireland.
Hilco acquired Homebase from Wesfarmers Ltd. in May for £1. The Australian retailer booked a loss of up to £230 million in the deal.
"After a comprehensive review, Homebase has concluded that its current store portfolio mix is no longer viable. Rental costs associated with stores are unsustainable and many stores are loss-making," the company said in a statement.
Homebase CEO Damian McGloughlin also said launching a CVA has been a difficult decision for the company, adding that they need to continue to take action to address the underperformance of the business and protect thousands of jobs.
The chain's creditors will vote on the CVA plan Aug. 31. If approved, the affected stores reportedly will close during late 2018 and early 2019.