An 11th hour deal to save Phones 4u proposed by US law firm Brown Rudnick is highly unlikely to succeed according to a well-placed industry source, Mobile has learned.
The proposal from Brown Rudnick, who has been representing Phones 4u's creditors since Monday, would see a debt-for-equity swap for the retailers creditors, whilst the networks would be offered the commercial terms they had sought with Phones 4u’s former owners.
However, a well-placed industry source has questioned the feasibility of the deal, particularly considering that Phones 4u is in administration. They pointed to the fact that agreements would need to be reached with manufacturers as well as the networks which would inevitably take time. They added that it was highly unlikely that in the last four days that Brown Rudnick could learn the full details of the commercial terms had been previously discussed with the networks as no information had been directly exchanged between the two. The other major issue raised was that if the number of stores changed whether this would affect the proposal as they understood PwC was actively selling Phones 4u stores.
Louise Verrill, Partner at Brown Rudnick, who is acting for a large group of senior secured bondholders in Phones 4U Finance Plc, said: ‘Our bondholder group has been working hard to ensure that the company’s cost structure can be adjusted to meet the commercial terms that EE and Vodafone put to the previous owners. So, we have proposed a restructure of the business that means the capital structure will no longer be an impediment to achieving the commercial outcome which allows the company to continue as a going concern.
‘The bondholders would take a significant write down on their debt which would make the business commercially viable and lay foundations for the 5,596 jobs to be saved. We are already in dialogue with Ian Green of PWC, one of the joint administrators, and look forward to collective meaningful engagement with Vodafone and EE.’
Mobile is awaiting comment from PwC.