Poundland is requesting a 10-working-day extension to its legal shield from creditors to conclude rescue discussions with three interested suitors. Parliamentary committee chair Liam Byrne accused owner Gordon Brothers of taking millions out of the retailer over 17 months and restricting cash flow before Christmas. Despite management reporting higher year-on-year sales, advisory firm Alix Partners remains prepared to manage administration if a deal fails. Gordon Brothers noted it could make more money by breaking up the chain, as existing bids fall below its targeted debt recovery.
Key points
The owner faces parliamentary criticism for extracting capital while the retailer was fig…: The owner faces parliamentary criticism for extracting capital while the retailer was fighting for financial survival.
A breakup of the chain remains a possibility because full acquisition bids fail to cover…: A breakup of the chain remains a possibility because full acquisition bids fail to cover the £30m shareholder debt.
Administration looms under Alix Partners if the ongoing rescue negotiations collapse befo…: Administration looms under Alix Partners if the ongoing rescue negotiations collapse before the legal shield expires.
Sources checked by our analysis pipeline: 1
MPs have accused the owner of Poundland of extracting millions of pounds from the retailer when it was on a “knife-edge” as the budget retailer seeks extra time to secure a rescue deal.
The management of Poundland, which employs 12,000 people and operates 600 stores in the UK and Ireland, will seek a two-week extension of legal protection from creditors from the high court on Thursday morning.
The budget chain’s owner, Gordon Brothers, is 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.
The legal measure protects Poundland from the demands of creditors until Thursday morning while a solution to its problems is sought.
Directors of Poundland are now seeking a further 10 working days’ grace, which must be approved by the high court. That comes after Gordon Brothers, which is understood to be supportive of the extension, released £10m more in funds to help Poundland secure new stock and keep trading.
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