The business secretary has written to the owner of Poundland amid fears that the cut-price retailer could collapse into administration, threatening to overshadow John Healey’s budget.
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retailer → write → budget
Sources said that Gordon Brothers, the US investment firm that bought the 600-store Poundland chain for £1 last summer, looks set to appoint administrators to the struggling retailer.
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that → say → retailer
Jonathan Reynolds has written to Gordon Brothers to establish the latest situation at the company, which employs 12,000 staff.
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which → write → staff
The company rejected the only bid to take on the group – which includes the 50-store Dealz chain in Ireland – as a solvent company in its entirety, from Northern Ireland’s Martin Property Group, earlier this week.
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which → reject → Group
It is understood Gordon Brothers is poised to file a notice of intention to appoint the advisory firm AlixPartners as administrator, potentially as early as Wednesday.
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Brothers → understand → Wednesday
Three independent directors appointed to help oversee a sale have quit amid disquiet over the move towards insolvency.
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directors → appoint → insolvency
The timing of the move threatened to overshadow Healey’s first budget as chancellor, amid longstanding complaints from companies over costs imposed by the government on businesses.
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timing → threaten → businesses
Barry Williams, the boss of Poundland, wrote to workers saying the rejection of the bid from Martin Property Group was “unexpected, unwanted and wholly avoidable”.
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rejection → write → Group
An improved bid from the Northern Irish firm has not been ruled out.
However, sources said that Martin’s bid fell well short of Gordon Brothers’ hopes to recoup the £30m in debts it took on with Poundland.
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it → rule → Poundland
The bid is understood to be worth more than £15m, with only a portion upfront.
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bid → understand → portion
One industry source said that suppliers to Poundland were already beginning to hold back on deliveries, making it tougher for the group to secure a rescue bid.
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group → say → bid
Industry insiders said Gordon Brothers wanted to move quickly as Poundland was flush with stock ahead of the busy Christmas period.
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Poundland → say → period
A quick break-up of the chain, with parcels of stores and stock sold off, would lead to a maximum return for the restructuring specialist, sources said.
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sources → sell → specialist
“Gordon Brothers has a simple choice.
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Brothers → have → choice
It can accept an offer from Martin Group, worth at least half of the £30m which it secured for £1, or get significantly more than that by busting the business,” a source said.
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source → accept → business
“The only thing that can change this is if they feel the moral or public relations duty.”
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they → change → duty
Reynolds has instructed his chief strategic business adviser, David Bickerton, to “establish the facts” regarding Poundland’s potential collapse, as first reported by the Financial Times.
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Reynolds → instruct → Times
He is understood to have contacted Gordon Brothers but not Poundland’s management team, which had backed the Martin Property Group bid.
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which → understand → bid
A business department spokesperson said: “We know this will be a concerning time for Poundland employees, their families and communities across the UK.
“This is a commercial process and ultimately a decision for Poundland’s owners, so it would not be appropriate for the government to comment further.”
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government → say → owners
Gordon Brothers is understood to believe that it can raise more cash – as much as £30m – and keep more jobs in place long-term by breaking up Poundland and selling off the stock and stores to a variety of retailers.
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it → understand → retailers
There could be as many as eight interested parties, including the US investment firm Fortress, which owns Poundstretcher, and the owner of The Range.
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which → include → Range
B&M is thought to be interested in taking on at least some outlets.
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B&M → think → outlets
However, one industry insider said: “Who is going to take on 600 high street stores?”
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Who → say → stores
He predicted that up to 500 could be left without a buyer in the event of a break-up, leading to significant job losses.
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500 → predict → losses
Gordon Brothers has been approached for comment.
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Brothers → approach → comment
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