Poundland owner Gordon Brothers reportedly rejects whole-chain rescue bid

Poundland owner Gordon Brothers, a restructuring specialist, rejected Martin Property Group’s management-backed offer to rescue the whole discount chain, but talks were continuing, the Guardian said.

The chain filed a notice of intention to appoint administrators at the High Court on 29 October. The notice protects Poundland from creditors’ demands for 10 days while a solution is sought. Advisory firm AlixPartners is lined up to run the process.

What the proposed rescue would pay

Martin’s proposal would take on the asset-backed loan—borrowing secured against assets that a lender can take if it is not repaid—in addition to making the offer payment.

The Guardian said the proposed payment would repay only half of Poundland’s £30 million (about $40.3 million) shareholder loan. Gordon Brothers took on most of that loan when it bought the chain.

Poundland’s former owner Pepco holds £7.5 million (about $10.1 million) of the shareholder debt and is prepared to wait for repayment in the hope of saving the business, the Guardian said, crediting Sky News with the initial report.

Sources close to the process told the Guardian that Gordon Brothers was unwilling to accept the upfront and deferred-payment structure because it left uncertainty for creditors, staff and suppliers.

Talks remain open

Gordon Brothers publicly said it was thoroughly and objectively evaluating options for the whole business and parts of it, with the aim of minimizing uncertainty for Poundland’s people and other stakeholders.

The Guardian said established retail operators had submitted firm offers for groups of outlets amounting to about half of Poundland’s stores. Those stores could be converted to the buyers’ formats.

A whole-chain rescue also remains under discussion: the Guardian said on 30 October that a deal with Martin Property Group might still be agreed over the next 10 days.