Poundland's future is uncertain, with all 12,000 of its staff potentially affected as the discount chain's owners prepare to take a significant step towards administration. The move could come as early as trading on the day the notice is filed.
Management is poised to file a notice at the High Court of their intention to appoint administrators. If approved, this would give the company 10 days to find a rescue deal, raising the prospect that the high street stalwart, which operates 600 stores, could collapse.
Takeover bid rejected
Sources indicate the likely plunge into administration has not been driven by poor trading but rather by access to funding from its American owners, Gordon Brothers. The restructuring and investment firm bought Poundland for a nominal £1 last year from Polish retail group Pepco, but put the business up for sale in September this year.
Irish firm Martin Property Group (MPG) put forward a bid to take the business on as a going concern. However, Poundland's managing director Barry Williams wrote to the workforce on Tuesday with what he described as "very difficult news and I won't sugar coat it."
In the message, Mr Williams said that despite management's "enormous efforts" in recent weeks, Gordon Brothers had rejected MPG's offer. "To say I am disappointed is an understatement and you all deserve much better than this," he wrote.
Strong trading despite uncertainty
Mr Williams said MPG's offer was a "full funded, ready-to-go bid that would have kept the business intact and able to continue the remarkable progress we've made." The current situation was "unexpected, unwanted and wholly avoidable," he said, adding that it had led to Poundland's recently appointed independent directors resigning with immediate effect.
"This is a fast moving situation and clearly not of our own making," Mr Williams added. A note to suppliers seen by the Mirror showed that sales in recent weeks were up more than 8%, highlighting "strong continued trading." The possible administration comes right ahead of the busy Christmas period, when Poundland's stores are heavily stocked with products.
Interest from other retailers
The news follows separate reports claiming the government was "on alert" over the risk of thousands of job losses at Poundland. Downing Street was made aware of concerns the chain was put up for sale, amid fears about the economy just before Christmas.
Should Poundland close, it would be one of the biggest casualties on the high street in recent times. Reports suggest a number of major retail brands, including B&M, The Range and Poundstretcher, have expressed interest in buying parts of Poundland, understood to be interested in taking over some locations.
A spokesperson for Gordon Brothers said: "As well as interest from buyers for the whole business, the sale process has also surfaced a number of formal and indicative offers for significant viable parts of the business from established retail operators. These options will now be objectively evaluated, with a view to minimising uncertainty for Poundland's people and all relevant stakeholders."
