Business Secretary Jonathan Reynolds has said Poundland’s owner, Gordon Brothers, has serious questions to answer if it rejected a bid that could have avoided administration. The discount chain’s directors filed a notice of intention to appoint administrators last week, according to reports on 2 and 3 November.
Poundland has around 600 stores and employs 12,000 people, according to Retail Gazette. The notice of intention gives the business temporary protection from creditors, and Express and Star reports it gives a window of 10 working days to secure a rescue deal. The reports say no administrators have been appointed. Gordon Brothers bought the chain from Pepco Group last summer, according to the same newspaper.
The rejected offer
Poundland is understood to have rejected a management-backed takeover proposal from the Irish investment firm Martin Property Group, following a dispute over the repayment of a £30 million shareholder loan. Retail Gazette reports that Gordon Brothers reportedly wanted the loan repaid upfront, having acquired it for £1 as part of its takeover. Gordon Brothers has previously said it will objectively evaluate the offers on the table, according to TheBusinessDesk.
Mr Reynolds made the comment to The Telegraph, as quoted by TheBusinessDesk, and he said it depended on whether a bid had been on the table. The government is seeking urgent information to establish that the owner is acting within the law. It supports efforts to find a buyer but is understood not to be prepared to offer financial support.
Trading, interested buyers and supplier concerns
Suppliers were told Poundland’s sales rose 6.7% in September and 8.4% in the first three weeks of October, and officials have been told it is on course for a profit of £15 million this year, according to TheBusinessDesk, citing The Telegraph. A break-up of the estate is seen as the most likely outcome. Poundstretcher is understood to be interested in just under half of the stores, and The Range, Iceland and Lidl are also understood to be considering some sites.
Express and Star names CDS Superstores, Poundstretcher’s owner Fortress and TGJones owner Modella among interested parties, as in L’Express Franchise’s report on TGJones. The newspaper adds that B&M, Lidl and Aldi have reportedly shown interest, though deals are thought unlikely to include every store.
Mr Smith, who established Poundland in the 1990s, has urged Gordon Brothers to accept the Martin Property Group offer, according to Express and Star. The newspaper reports that workers protested outside the company’s Walsall head office on 29 October and that a petition asking the government to act had gathered more than 23,000 signatures.
What has not happened
As of these reports no administration has taken place, and no buyer has been named. A supplier, BMI Limited, has written to Mr Reynolds about the effect of an administration on suppliers, according to the Credit Protection Association, which stresses that these are the supplier’s concerns and do not confirm that an administration has occurred.
The founder, Steve Smith, has warned that a collapse could put as many as 30,000 jobs at risk across the wider supply chain. Earlier L’Express Franchise coverage looked at the risk to the chain when Fortress withdrew its bid.
