Second buyer bids for Poundland as collapse threatens 12,000 jobs

A second buyer has offered to rescue Poundland as the discount chain faces possible collapse, putting about 12,000 jobs at risk. The bid from London-based Xyra Group follows the rejection of an offer from Irish property firm Martin Property Group.

Xyra has offered to pay £12.5 million immediately toward a £30 million loan on Poundland’s books and defer the rest, the BBC reported, citing people familiar with the offer. Its proposal would repay a larger share of Poundland’s outstanding debt upfront than Martin Property Group’s bid. Xyra has offered to take over the whole business, though it is unclear whether it would keep the chain together or break it up.

Questions remain about whether Xyra has the funds and the capacity to own Poundland for the long term, the BBC reported. People familiar with the bid pointed to the appointment of Andrew Brode to Xyra’s board as a sign of credibility. Brode works for RWS, which provides AI solutions to businesses.

Poundland filed a notice of intention to appoint administrators last week, giving it 10 working days of protection from creditors to seek a rescue deal before potentially entering insolvency, according to The Guardian. The chain has lined up advisory firm AlixPartners to run the process after its US owner, Gordon Brothers, stopped providing funding, the newspaper reported.

Gordon Brothers bought Poundland for £1 last year and began a sale process at the start of September. It has rejected Martin Property Group’s bid, which the BBC reported would have saved the retailer’s 12,000 staff. The owner said it was still considering offers.

“We are pursuing all avenues through the sale process to find a solution which protects as many jobs as possible and preserves value,” Gordon Brothers said. “Work continues at pace, engaging in active discussions on offers with interested parties.”

The company said Poundland was distressed when it bought the chain and required restructuring, operational changes and funding. Despite those efforts, the business “remains challenged and vulnerable,” it said.

Gordon Brothers and Poundland executives held separate talks with government ministers on Wednesday, The Guardian reported. Business Secretary Jonathan Reynolds urged Gordon Brothers to protect staff however possible, according to the BBC. The owner committed at its meeting to prioritising offers that protect shops and workers, the BBC reported.

Prime Minister Andy Burnham called for a “practical solution” to keep stores open and save jobs. “Focus on the people in your employment,” he told Poundland’s executives. “Come up with a practical solution that saves jobs and saves those stores because many of them are viable propositions.” He said the government was prepared to consider what it could do to help.

The risks extend beyond Poundland’s workforce. Founder Steve Smith told the BBC that 2,000 to 3,000 suppliers that work solely for the chain could be affected by its collapse, potentially putting as many as 30,000 people at risk overall. Suppliers facing millions of pounds in losses told The Guardian that Gordon Brothers should not be allowed to maximise its return at their expense.