Poundland’s owner has said it is “taking due care” to consider if one of three bidders had enough funds to ensure its survival after the troubled budget retail chain secured two more weeks to find a deal. The management of Poundland, which employs approximately 12,000 people and operates 600 stores in the UK and Ireland, won approval from the high court for an extension of legal protection from creditors on Thursday morning. Poundland’s board said it had sought the extra time “with a view to identifying the best available prospects for shareholders, creditors and our people”.
It added: “Our stores remain open as usual during this period and we thank our colleagues, suppliers and customers for their incredible and continued support.” The retail chain’s owner, the US investment firm Gordon Brothers, has been under pressure to accept a bid for the company that would save retail jobs and protect thousands of suppliers since Poundland filed a notice of intention to appoint administrators two weeks ago. A spokesperson for Gordon Brothers said on Thursday: “We support the board’s decision to extend the legal moratorium over the company by a further 10 working days. This brings additional stability amid an ongoing sale process in the backdrop of increasing cost pressures and a difficult inflationary economic environment.
We, the board, and all involved are working to secure a credible plan that delivers certainty, preserves value and protects as many jobs as possible.” Gordon Brothers confirmed it had provided £85m of financing, understood to be via an asset-backed loan that Poundland has only partially used over the past year. That financing is in addition to a £30m shareholder loan largely taken on by Gordon Brothers when it bought the business for a nominal £1 last year. Gordon Brothers fought back after MPs on Wednesday accused the Poundland owner of extracting millions of pounds from the retailer when it was on a “knife-edge”.
Documents provided to MPs showed the finance firm had taken close to £20m in interest payments and various fees, including those relating to store closures since acquiring Poundland. Gordon Brothers said it had provided finance for Poundland “when no one else was willing to finance the company – and has contributed substantial efforts to support a turnaround. Our efforts have continuously focused on the company’s value and its people, not prioritising one over the other.”
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