Poundland Founder Offers to Invest as Rescue Deadline Nears
Poundland has until Thursday to find a rescue deal, and the man who founded it says he would invest. Up to 12,000 jobs are at risk if the discount chain collapses.
Owner stops funding, a deadline is set
The US firm Gordon Brothers bought Poundland from the Polish retail group Pepco last year for £1. It has since stopped funding the business and turned down a takeover offer from the Irish company Martin Property Group.
Poundland's board says it ran a formal sale process but could not find an acceptable offer for the whole company, despite enormous efforts.
Gordon Brothers says it is assessing offers from several bidders, some for the whole chain and some for its stronger sections. Martin Property Group had been management's preferred bidder, the owner noted, but attention must now turn to other active bids.
A founder says the numbers do not fit
Steve Smith opened the first Poundland store in Burton-upon-Trent in 1990. He is from Wolverhampton. He says he tried to reach Gordon Brothers over the past three months and heard nothing back. He took the silence as a sign that offers must already be on the table.
He was surprised to learn of the administration filing, he says, because sales were up 11% on last year. Even last week, he says, they ran 11.2% ahead.
"Although Poundland made a loss last year, they're going to make a good profit this year, so it's just crazy," Smith said. If there is an opportunity, he wants to put money back in.
He also pointed to the people outside the payroll. By his estimate, two or three thousand suppliers work only for Poundland. He puts the jobs at stake at 20,000 to 30,000, not 12,000.
The chain has 600 stores across the UK and Ireland and, Smith says, four to five million customers a week.
Ministers meet the board, with limited room to act
The BBC understands that Business Minister Kate Dearden will meet senior Poundland executives later this week. Government sources say it is mainly a fact-finding meeting. The same sources add that ministers have limited room to intervene, though more than 10,000 jobs and hundreds of stores are at stake. Sky News reported the meeting first.
No meeting is planned between the government and Gordon Brothers.
Prime Minister Andy Burnham has said the government is ready to support staff. He has also asked why an offer to buy the business was rejected.
Concerns have been raised that Gordon Brothers refused a rival buyer's offer to protect its claim on a £30 million loan that came with the purchase.
Liam Byrne, Labour MP and chair of the Business, Innovation, Science and Trade Committee, believes the company can be saved. "The whole deal stinks to high heaven right now," he said. He urged ministers not to wait for Thursday and to bring everyone together now.
Our view
The decision sits with Gordon Brothers, which holds the bids and has said it is looking at both whole-company and part-company offers. A sale of only the viable parts would leave a different outcome for staff and suppliers than a buyer for the entire chain. The government has said its room to intervene is limited, so Thursday's result depends mostly on what the bidders put forward. Gordon Brothers has not been quoted on the £30 million loan concern.
Source: BBC News