Phones 4u to Fire 1,700 Staff, Close 362 Stores Amid SalesAmy Thomson
Phones 4u Ltd.’s administrator said it will close 362 stores and cut almost 1,700 jobs as the failed U.K. mobile-phone chain sells off its assets to pay bondholders and salaries.
PricewaterhouseCoopers LLP, which was appointed administrator last week, said the sale of an additional 198 shops and 160 concessions to former carrier partners EE Ltd., Vodafone Group Plc and retailer Dixons Carphone Plc has been approved by the courts, in a statement yesterday. The buyers will take on about 2,000 staff members.
Paul Copley, a partner at PwC in London, said that he wanted to “manage down” bondholders’ expectations that there will be more large asset sales, in a call today. PwC is helping Phones 4u sell stores and cut employees after EE and Vodafone said they wouldn’t renew their contracts with the store, depriving the retailer of the source of 90 percent of the plans it sells.
There are about a dozen interested buyers for the insurance business, PwC said today. New York-based Assurant Inc. was named as an interested party in an earlier call.
Phones 4u’s 9.5 percent notes, which were quoted at 37.5 pence to the pound this morning in London, fell 5.41 percent to 34.9 pence at 5:08 p.m. today.
PwC said today it hasn’t determined the future of Phones 4u’s remaining 1,100 employees. The company said on Sept. 19 that it had cut 628 employees who worked at the head office and in sales.
EE agreed to buy 58 Phones 4u shops and take on 359 employees, the largest U.K. wireless carrier said yesterday. EE may also buy the Phones 4u Life mobile business, a reseller of EE’s service, PwC said today.
Dixons Carphone, the London-based electronics retailer that agreed last week to take on 800 Phones 4u employees, is in negotiations to buy some Phones 4u stores, people familiar with the matter said.
Vodafone said on Sept. 19 that it plans to buy 140 shops and take on about 900 employees. Phones 4u had 700 stores and concessions and almost 5,600 employees when PwC was appointed as its administrator last week.
Vodafone’s agreement to buy stores and inventory will raise 12.4 million pounds ($20.3 million) while EE’s deal for shops will raise 2.5 million pounds, PwC said.
Phones 4u’s debt includes 635 million pounds of bonds and a 125 million-pound revolving credit facility, according to data compiled by Bloomberg. The bonds comprise 430 million pounds of 9.5 percent senior secured notes maturing April 2018 and 205 million pounds of 10 percent payment-in-kind notes due April 2019, which give the company the option to pay interest with more debt.