Key Takeaways
- • Business Secretary Jonathan Reynolds has written to Gordon Brothers, the US investment firm that bought the 600-store Poundland chain for £1 last summer, to establish the latest situation at the company, which employs 12,000 staff.
- • Sources say Gordon Brothers is poised to file a notice of intention to appoint AlixPartners as administrator, potentially as early as Wednesday, after rejecting the only bid for the group from Martin Property Group.
- • Martin Property Group's bid, reported to be worth more than £15m with only a portion paid upfront, fell well short of the roughly £30m in debts Gordon Brothers took on with Poundland.
- • Gordon Brothers reportedly believes a break-up sale of stores and stock to multiple retailers could raise as much as £30m, though an industry insider warned up to 500 stores could be left without a buyer.
- • Three independent directors overseeing the sale have resigned, and suppliers are reportedly beginning to hold back deliveries, complicating any rescue.
Summary
Business Secretary Jonathan Reynolds has written to Gordon Brothers, the US investment firm that acquired the 600-store Poundland chain for £1 last summer, amid fears that the cut-price retailer could collapse into administration. According to the report, the letter seeks to establish the latest situation at the company, which employs 12,000 staff. The Financial Times first reported that Reynolds has instructed his chief strategic business adviser, David Bickerton, to "establish the facts". He has contacted Gordon Brothers but not Poundland's management team, which had backed the rival bid.
Sources said Gordon Brothers is poised to appoint AlixPartners as administrator, with a notice of intention to appoint potentially filed as early as Wednesday. The move follows the firm's rejection of the only bid for the group, which includes the 50-store Dealz chain in Ireland, from Northern Ireland's Martin Property Group. The bid was rejected as a solvent sale of the company in its entirety. Three independent directors appointed to help oversee a sale have resigned amid disquiet over the move towards insolvency. Barry Williams, Poundland's chief executive, told staff the rejection was "unexpected, unwanted and wholly avoidable". Martin's bid has not been ruled out as improved, but sources said it fell well short of Gordon Brothers' hopes to recoup the £30m of debt it took on with Poundland, being understood to be worth more than £15m with only a portion upfront.
Gordon Brothers is understood to believe a break-up would raise more cash, as much as £30m, and preserve more jobs long-term by selling stores and stock to a variety of retailers. Up to eight interested parties have been mentioned, including Fortress, which owns Poundstretcher, and the owner of The Range, with B&M thought to be interested in at least some outlets. However, one industry insider questioned who would take on 600 high street stores, predicting up to 500 could be left without a buyer, which would lead to significant job losses. Suppliers are reportedly already holding back deliveries, and Poundland's stock levels are high ahead of Christmas.
The timing threatens to overshadow Chancellor John Healey's first budget, amid longstanding complaints from businesses about government-imposed costs. A business department spokesperson said the matter is a commercial process and ultimately a decision for Poundland's owners, adding that it would not be appropriate for the government to comment further. Gordon Brothers has been approached for comment.
Sources said Gordon Brothers is poised to appoint AlixPartners as administrator, with a notice of intention to appoint potentially filed as early as Wednesday. The move follows the firm's rejection of the only bid for the group, which includes the 50-store Dealz chain in Ireland, from Northern Ireland's Martin Property Group. The bid was rejected as a solvent sale of the company in its entirety. Three independent directors appointed to help oversee a sale have resigned amid disquiet over the move towards insolvency. Barry Williams, Poundland's chief executive, told staff the rejection was "unexpected, unwanted and wholly avoidable". Martin's bid has not been ruled out as improved, but sources said it fell well short of Gordon Brothers' hopes to recoup the £30m of debt it took on with Poundland, being understood to be worth more than £15m with only a portion upfront.
Gordon Brothers is understood to believe a break-up would raise more cash, as much as £30m, and preserve more jobs long-term by selling stores and stock to a variety of retailers. Up to eight interested parties have been mentioned, including Fortress, which owns Poundstretcher, and the owner of The Range, with B&M thought to be interested in at least some outlets. However, one industry insider questioned who would take on 600 high street stores, predicting up to 500 could be left without a buyer, which would lead to significant job losses. Suppliers are reportedly already holding back deliveries, and Poundland's stock levels are high ahead of Christmas.
The timing threatens to overshadow Chancellor John Healey's first budget, amid longstanding complaints from businesses about government-imposed costs. A business department spokesperson said the matter is a commercial process and ultimately a decision for Poundland's owners, adding that it would not be appropriate for the government to comment further. Gordon Brothers has been approached for comment.
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