By Ahmed Abdelsalam
Poundland's future hangs in the balance after the discount retailer filed a notice of intention to appoint administrators, a move that would give the business 10 days of breathing space to secure a rescue deal. The chain operates 600 stores across the UK and Ireland and employs 12,000 staff.
Funding restricted by owner
Managing director Barry Williams told staff in a memo that the chain's American owner, Gordon Brothers, had limited Poundland's access to funds needed for day-to-day operations. Williams said the restrictions were unexpected and that the business does not deserve to enter administration given strong sales and an ongoing recovery.
Failed bid from Martin Property Group
Irish firm Martin Property Group (MPG) submitted a bid to take on Poundland as a going concern, but the offer fell short of the £30 million shareholder loan that Gordon Brothers inherited from previous owners and wants to recoup. MPG was reportedly unwilling to pay the full amount upfront.
Management disputes owner's decision
Williams described the situation as "unexpected, unwanted and wholly avoidable," adding that MPG's bid was fully funded and would have kept the business intact. Three independent directors appointed to oversee a sale resigned immediately after disagreeing with Gordon Brothers' rejection of the solvent offer.
Potential break-up of chain
If the administration notice is approved by the High Court, Gordon Brothers could pursue a pre-pack administration to find a new owner or break up the business and sell parcels of stores to interested parties such as Iceland, Lidl, and B&M.
Administrators lined up
The BBC understands that AlixPartners has been lined up as administrators. Gordon Brothers said it would now evaluate other active bids for the whole business or viable parts, aiming to minimise uncertainty for staff and stakeholders.
