UK: Phones 4U Rescue dashed

A Phones 4U shop sign

A Phones 4U shop sign - Credit: PA

Hopes for a last-ditch rescue of Phones 4u have been quashed as talks continue over deals to save at least some of its shops and jobs.

Administrators from PwC said it was in discussions with three parties over the potential sale of assets following the company’s collapse on Sunday.

However, it said a proposed debt-for-equity swap in which bondholders agree to cut back on what they are owed in order to reopen contract talks with network operators EE and Vodafone was not an option.

PwC expects to pay the majority of salaries and wage arrears and paid tribute to the co-operation of staff since the shock demise of the business.

Joint administrator Rob Hunt said: “Thousands of people have stuck with us during the course of this week in difficult circumstances.”

Some 560 stores and 4,800 jobs are still at risk after Dixons Carphone agreed a deal yesterday to take on the 800 staff who had worked at 160 Phones 4u concessions within Currys/PC World stores.

All Phones 4u stores are currently shut while PwC attempts to find buyers.

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A call with bondholders today heard a statement from Phones 4u’s private equity owner BC Partners in which it said it was devastated by the collapse.

The plan by bondholders involved a debt-for-equity swap to wipe out an estimated £760 million of debt and make the business commercially viable for new contract talks with the phone networks.

But Mr Hunt of PwC said: “There’s no prospect of completing a debt-for-equity swap so we are pursuing sales of the underlying assets.

“These conversations are most live with three parties and we would hope that one of these or all three would come through to a transaction over the course of the coming days.”

EE and the other network operators were accused of a “co-ordinated attempt to kill off” the retailer after their failure to renew contracts left the company with no option but to call in administrators.

Entrepreneur John Caudwell, who set up the operation in the 1980s before selling it for £1.5 billion in 2006, called the behaviour of the networks “extremely callous, extremely ruthless”.

Vodafone said it rejected any suggestion that it behaved inappropriately during its negotiations with Phones 4u and indicated that the private equity-owned firm’s debt repayment schedule hampered the discussions.

However, this was rejected by BC Partners in its statement today.

EE said its decision not to renew its contract, which ran until September 2015, was in part driven by uncertainty over the long-term viability of Phones 4u. Its decision triggered the collapse of Phones 4u as it left the retailer without a single network partner.