Poundland faces collapse as owner rejects rescue offers

Summarised from 6 outlets · 9 reports · Updated 4 Nov, 14:50 · Archive

Poundland's 12,000 jobs face uncertainty after the US owner Gordon Brothers rejected rescue offers and filed for administration.

Poundland, the discount retailer with 600 stores and 12,000 employees, filed a notice of intention to appoint administrators at the high court last Thursday. The legal move protects the company from creditors' demands until 12 November while a solution is sought. The chain is controlled by Gordon Brothers, a US restructuring specialist, which has lined up the advisory firm AlixPartners to run the administration process.

Gordon Brothers has rejected multiple rescue offers, including a solvent bid from Martin Property Group, an Irish firm. Martin's proposal would have allowed the entire business to continue operating without entering insolvency. The restructuring firm turned down Martin's offer because it did not offer up-front payment for a £30m loan inherited from Poundland's previous owners, PepCo. Innovest, another Irish investment firm, has also tabled a solvent bid. Gordon Brothers is understood to believe it can raise more from breaking up Poundland than through accepting these offers.

Steve Smith, who founded Poundland with a store in Burton upon Trent in 1990 and sold his final shares for £250m in 2006, has warned that staff could be out of work for 'years' if the chain collapses. He said: 'Once these jobs are lost, they are lost' from Britain's struggling high streets. Suppliers have held back on deliveries during the uncertainty, hurting the retailer's ability to trade.

The crisis extends beyond Poundland's direct workforce. A Poundland supplier, Highcrest Retail Brands, a family-owned Bradford business, stated it will lose millions if the firm becomes insolvent, though it will remain afloat. However, smaller and medium-sized suppliers have warned they would go under if Poundland collapses. Smith reported that two or three thousand suppliers work exclusively for Poundland, meaning tens of thousands more could be affected beyond the 12,000 staff. If Poundland's stores are sold to new buyers, only about half are currently of interest, potentially meaning 6,000 employees would not be re-employed.

The government has intervened amid political pressure. Downing Street said Gordon Brothers is 'not acting in the best interests' of staff and stores and called on it to explain why it has rejected solvent offers. MPs have called on the government to protect Poundland from 'predatory capitalism' and asset-stripping. Gareth Snell, Labour MP for Stoke-on-Trent Central, asked in parliament what could be done to 'send a message to Gordon Brothers that the predatory capitalism that they are putting into this company will not be tolerated'.

Poundland's management is scheduled to meet Kate Dearden, minister for the future of work, on Wednesday, along with Usdaw, the shop workers' union. Business secretary Jonathan Reynolds is also due to meet with Gordon Brothers. Andy Burnham, whose Makerfield constituency is home to a Poundland distribution centre employing 270 staff, has urged Gordon Brothers to work with the government on a 'practical solution' to secure the future of workers and shops.

Supermarket giant Tesco is reportedly in discussions over acquiring around 150 of Poundland's stores, while discount chain B&M has also expressed interest in parts of the business. The collapse would be particularly damaging in the run-up to Christmas, when the retail sector typically sees peak trading.

How it is being reported

• Poundland suppliers warn US owner must not maximise its return at their expenseBritish companies that supply the budget retailer face millions of pounds-worth of losses if it collapses Suppliers facing millions of pounds in losses if Poundland collapses have said the chain’s US owner “should not be permitted” to maximise its return at their expense, as ministers attempt to intervene in the situation. The fate of the retail chain, its 12,000 staff and about 2,000 suppliers remains uncertain after it filed a notice of intention to appoint administrators at the high court last Thursday. Continue reading...The Guardian · 4 Nov, 15:31
• Poundland could be nationalised to save it from collapse, says Labour business ministerPoundland could be nationalised to save it from collapse, a government minister suggested today.This is Money · 4 Nov, 14:33
• Burnham urges Poundland owner to work with government to save jobsAndy Burnham has said Poundland’s owners must work with the government on a “practical solution” to secure the future of its workers and shops. The Prime Minister criticised Gordon Brothers, the US investment firm which owns the retailer, for failing to engage with the “viable propositions” which have been tabled by a number of bidders. [...]City AM · 4 Nov, 14:15
• Poundland supplier urges 'thorough' state probe into owner's conductA major Poundland supplier has urged the government to "thoroughly investigate" the conduct of its majority owner as the discount chain teeters on the brink of collapse.Sky News · 4 Nov, 11:43
• Poundland update as retailer faces collapse - stores across UK could close downThe popular retailer filed a notice of intention to appoint administrators last week.Daily Express · 4 Nov, 11:25
• Poundland supplier 'will lose millions' if retailer collapsesOne of Poundland's suppliers will lose millions if it collapses, while other suppliers have said they would go under.BBC Business · 4 Nov, 00:03
• Protect Poundland from predatory capitalism, MPs tell governmentBudget retailer and 12,000 jobs at risk after US owner fails to accept buyout offers MPs have called on the government to protect Poundland and other high street stores from “predatory capitalism” and asset-stripping. The fate of the retail chain and its 12,000 staff remains uncertain after it filed a notice of intention to appoint administrators at the high court last Thursday. The US restructuring specialist Gordon Brothers, which controls Poundland, has lined up the advisory company AlixPartners to run the process. Continue reading...The Guardian · 3 Nov, 17:29
• Poundland owner ‘not acting in best interests’ of workers, says No10Poundland owner Gordon Brothers is “not acting in the best interests” of the discount retailer’s staff and stores as it hurtles towards collapse, Downing Street has said. The Boston-based investment firm, which has faced intense criticism over its attempted sale of Poundland, must explain why it has rejected solvent offers to rescue the troubled retailer [...]City AM · 3 Nov, 15:26
• Poundland staff could be out of work for years if retailer collapses, founder saysSteve Smith calls on owners to accept proposed buyout as 12,000 staff face uncertain future in run-up to Christmas The founder of Poundland has warned that staff at the retailer could be out of work for “years” if it collapses, as he called on the owners of the troubled chain to accept a proposed buyout deal. Steve Smith, who set up the firm with a store in Burton upon Trent in 1990, said: “Once these jobs are lost, they are lost” from Britain’s struggling high streets. His warning comes as the chain’s 12,000 employees face uncertainty over their future in the run-up to Christmas. Continue…The Guardian · 3 Nov, 07:00

In this story: Poundland · Gordon Brothers · Steve Smith · Martin Property Group · Kate Dearden · AlixPartners · Burton upon Trent · Andy Burnham

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