Digest · Local Post
The founder of Poundland has warned that staff at the retailer could be out of work for “years” if it collapses, as he called on the owners of the troubled chain to accept a proposed buyout deal. Steve Smith, who set up the firm with a store in Burton upon Trent in 1990, said: “Once these jobs are lost, they are lost” from Britain’s struggling high streets. His warning comes as the chain’s 12,000 employees face uncertainty over their future in the run-up to Christmas.
Poundland’s future hangs in the balance after the retailer, which is controlled by the US restructuring specialist Gordon Brothers, filed a notice of intention to appoint administrators at the high court on Thursday, with the advisory firm AlixPartners lined up to run the process. The legal measure protects Poundland from the demands of creditors until 12 November while a solution to its problems is sought. However, the likelihood of it avoiding mass store closures and job losses diminishes by the day as suppliers have held back on deliveries, hurting its ability to trade .
Poundland’s management is scheduled to meet Kate Dearden, the minister for the future of work, on Wednesday as political pressure mounts on Gordon Brothers to accept an offer from Northern Ireland’s Martin Property Group rather than calling in administrators to break up the retailer. The restructuring firm is understood to believe that it can raise more from a breakup of Poundland than through the Martin offer. Smith – who sold his final shares in Poundland for £250m in 2006 – said he was prepared to support that offer but Martin Property Group did not need his cash.
“It was my baby,” he said, adding that he had put in an offer when Poundland was first put up for sale but had not heard back and it was too late to now launch his own bid. “If they have got offers on the table, why is Gordon Brothers not taking it and saving all these people? Retail is hard out there and if these people lose their job it could be a couple of years before they get jobs again.
They work week to week and need their wages,” Smith said. “It is not just 12,000 jobs. Poundland has more than 2,000 suppliers, some only deal with Poundland and some employ hundreds of people.” He suggested that as many as 30,000 jobs could be at risk in Poundland’s supply chain, stores and at other affected businesses on high streets around the country.
“Poundland brings in 4 million to 5 million customers every week to towns and shopping centres and retail neighbours are going to suffer as well,” Smith said. skip past newsletter promotion after newsletter promotion “Now it has been restructured and is turning a corner and starting to do well.” It is understood that talks continue about a potential deal under which Martin Property Group has offered about £7.5m up front and the same again in deferred payments over the next two years. That would pay off only half the £30m shareholder loan, the majority of which was taken on by Gordon Brothers when it bought the company. The deal would also include taking on a further, asset-backed loan worth about £90m, it is understood.
This deal has been rejected by Gordon Brothers despite Pepco, a former owner of Poundland that holds the other £7.5m of the debt, being prepared to wait for repayment in the hope of saving the business, as first reported by Sky News. Gordon Brothers has been approached for comment.
Source: The Guardian
