Poundland has been granted 10 additional days to secure a rescue deal after its US owner agreed to release a further £9m from the discount chain's bank accounts. The extension follows emergency talks between MPs and Gordon Brothers, the investment firm that bought Poundland for £1 last year and has since frozen about £50m of the retailer's cash.
The 600-shop chain, which employs 11,000 people, had faced a midnight deadline to find a buyer. Gordon Brothers has now released £9m on top of £10m announced earlier, allowing Poundland to restock shelves and pay wages ahead of the Christmas trading period. Three bids for the business remain on the table, all rejected by Gordon Brothers, which MPs say stands to profit more from selling the company and its stock in parts.
Liam Byrne, chairman of the business and trade committee, said he was deeply concerned by Gordon Brothers' conduct. The firm refused to prioritise protecting jobs and stores over its own financial returns, he said, adding that it had taken millions out of Poundland at a time when the business was on a knife edge. Byrne urged the firm to ensure Poundland had access to the funds it needs to trade during what should be one of the busiest periods of the year.
Poundland chief executive Barry Williams told staff last week that like-for-like sales were up 11.4 per cent and that the business made a profit of £18.1m in the year to September, a recovery from losses of £68m the previous year. Gordon Brothers has described the chain as challenged and vulnerable to any potential downturn in future trading. It has argued that splitting the business and selling chunks of its 600 sites to other retailers, including Poundstretcher, Tesco and B&M, may be the best way to secure jobs.
Why it matters for wealth
The Poundland crisis illustrates how leveraged buyouts of distressed retail assets can leave creditors and employees exposed when owners control cash flow and reject rescue bids. The dispute over whether a piecemeal sale or a single buyer protects more jobs may set a precedent for how similar retail administrations are handled.
Poundland's board was due to hold an urgent meeting on Wednesday night following the private session with MPs.
Source: BBC News
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