Poundland is set for an extended deadline to secure a rescue deal after its US owners told MPs on Wednesday they favor giving the discount chain more time.
The retailer, which employs 11,000 staff across roughly 600 shops, has been edging toward administration. Gordon Brothers blocked the business from accessing cash in its bank accounts, according to BBC News.
A deadline to secure a buyer was originally set to expire at midnight. Sources close to the situation told BBC News they expect more time will be granted following the release of funding in recent days.
A committee of MPs questioned Gordon Brothers during the session. Lawmakers accused the investment firm of hoping to profit from selling off Poundland’s stores and stock piecemeal.
Gordon Brothers bought the chain for just one pound last year. The firm is accused of forcing a liquidation outcome by restricting Poundland’s access to available cash needed to restock stores, pay wages, and cover rent ahead of Christmas. The investment firm has denied these claims.
Pressure remains on the owners after a takeover bid was rejected. That decision prompted calls for answers from politicians, including Prime Minister Andy Burnham.
About £50m had been frozen by Gordon Brothers, BBC News understands. This left Poundland bosses unable to restock shelves across its 600 shops.
Gordon Brothers agreed to release a further £9m from Poundland’s accounts, building on £10m announced earlier. This funding will grant the company an additional 10 days to find a new buyer.
Optimism is growing that the company might secure additional time to finalize an agreement as time runs out, according to The Independent. The struggling retailer filed a notice of intention to appoint administrators at the end of October.
That filing gave the business 10 days to secure a potential rescue deal. If negotiations fail, administrators from corporate advisory firm AlixPartners are lined up to take over.
Advisers have held talks with potential bidders including Tesco over proposals to buy up to 150 shops. Other chains such as Iceland and Lidl have also been involved in discussions.
Investment firm Xyra Holdings has emerged as a potential buyer for the entirety of the business. Irish real estate firm Martin Property Group is also believed to remain interested in a deal.
Gordon Brothers previously rejected a takeover offer from Martin Property Group. Management had named Martin Property Group as their preferred bidder last month.
Barry Williams spoke about the high stakes during the parliamentary proceedings.
“representing 11,000 colleagues”
said Barry Williams, telling Sky News he was also representing thousands in the broader supply chain and potentially the wider retail industry.
When questioned about whether he could safeguard employment and sustain operations leading up to Christmas, Williams informed Sky News that “no guarantees at this point” could be given.
