Ministers are investigating whether Poundland's owners, the distressed investor Gordon Brothers, are attempting to force the embattled retailer into administration, potentially jeopardizing thousands of jobs. Business Secretary Jonathan Reynolds has instructed adviser David Bickerton to establish the facts regarding the retailer's potential collapse. Gordon Brothers launched an accelerated sales process in September for the 12,000-employee business but rejected an offer from Ireland's Martin Property Group to buy Poundland as a going concern.
This rejection has increased the chance the group will be broken up and placed into insolvency, contributing to the recent departure of three newly appointed directors. The potential collapse would particularly impact jobs in Makerfield, the prime minister's constituency, as chancellor John Healey prepares to unveil his maiden budget. Government figures state Bickerton will ask "fairly basic questions of senior people around Poundland." An ally of Reynolds expressed concern for hard-working people potentially losing jobs.
Gordon Brothers, which bought Poundland for less than £1 last year from Pepco Group, has demanded £30mn to cover a shareholders' loan, deterring potential bidders. The professional services firm Alix Partners is waiting to be appointed administrator. A Gordon Brothers spokesperson stated attention must now turn to other active bids and formal offers for viable parts of the business, with a view to minimizing uncertainty for stakeholders.
The discount retailer, founded in 1990 by Dave Dodd and Steven Smith, has struggled with competition from B&M, Home Bargains, Aldi and Lidl, as well as rising costs and theft, forcing it to abandon its £1 price point.
Source: Financial Times Companies · Summarized by HeadlinesBriefing