An emergency resupply of about 16 million grocery items has been dispatched to 600 shops in the UK and Ireland as Poundland’s US owner, Gordon Brothers, agreed to unlock £21 million of the £50 million it had been withholding. The restocking operation, codenamed “Operation Gloria” by senior Poundland staff, comes as the discount chain races to find a buyer before a legal deadline of 26 November.
The resupply effort, named after the Gloria Gaynor song I Will Survive, saw pallets of Yorkshire Tea and Pot Noodles dispatched from depots over the weekend. Gordon Brothers earlier agreed to unlock £21m of the £50m it had been withholding amid accusations it was endangering the business. The money will allow Poundland to pay staff and continue receiving goods from suppliers during the crucial pre-Christmas trading period.
Poundland filed a notice of intention to appoint administrators at the end of last month, throwing the fate of its 12,000 employees and about 2,000 suppliers into uncertainty. Last week the chain won approval from the High Court for an extension of legal protection from creditors, giving it until 26 November to find a buyer. The company and Gordon Brothers are heading for talks with potential buyers and the business secretary, Jonathan Reynolds.
Discussions could be soured by allegations, denied by Gordon Brothers, that the investment group is more interested in protecting its own interests by breaking up the business despite signs of a dramatic improvement in trading performance. Gordon Brothers bought Poundland from the Polish retail group Pepco last year for a nominal £1 and says it rescued the company when nobody else would. However, the firm has faced criticism from MPs, who have accused it of “predatory capitalism” and extracting millions of pounds as Poundland struggled. Liam Byrne, the chair of the business select committee, likened Gordon Brothers to “the wolf of Wall Street, on the British high street”. Documents provided to MPs show the finance firm had taken close to £20 million in interest payments and various fees since acquiring Poundland. Gordon Brothers has denied freezing any funds that should have been available to Poundland and pointed to loans it has provided to prop up the company.
Poundland says it is in discussions with three potential buyers. Bids from investment groups Xyra Group Holdings and Innovest are understood to have relatively little chance of success. Martin Property Group, a Northern Irish company, is Poundland’s preferred bidder but progress has stalled over the repayment terms of a loan from Gordon Brothers. Several high-street retailers, including Tesco, are eyeing up some of Poundland’s shops.
A Gordon Brothers spokesperson said: “Funds will be released to allow payroll to be made in full this month, while additional funds continue to be released to support Poundland’s ongoing trading. While our preference remains a sale of the whole company, we are taking due care to ensure that any successful offer can provide the funds required to acquire the business and see it through to sustainable cash generation.”
Analysis
Why This Matters
- The fate of 12,000 jobs and about 2,000 suppliers hangs on a sale being completed before 26 November.
- Poundland is a major fixture on many British high streets; its collapse would leave empty shops and disrupt supply chains.
- The dispute between Gordon Brothers and MPs raises questions about how private equity firms manage distressed retailers.
Background
Poundland is a British discount chain that was bought by the US investment firm Gordon Brothers last year for a nominal £1 after its former owner, Pepco, sought to exit. Since then the company has struggled with debt and trading difficulties, leading it to file a notice of intention to appoint administrators. Gordon Brothers has provided loans but also drawn close to £20 million in interest and fees, drawing criticism from politicians. The High Court gave Poundland until 26 November to find a buyer.
Key Perspectives
Liam Byrne (chair of the business select committee): likened Gordon Brothers to “the wolf of Wall Street, on the British high street” and accused the firm of “predatory capitalism”.
Gordon Brothers: denied freezing funds, said it has released payroll money and is taking due care to ensure any successful offer can sustain the business; its preference remains a sale of the whole company.
Poundland: is in talks with three potential buyers; Martin Property Group is the preferred bidder but negotiations have stalled over loan repayment terms.
What to Watch
- Whether Martin Property Group can reach an agreement with Gordon Brothers on repayment terms.
- The outcome of business secretary Jonathan Reynolds’ meeting with Poundland and Gordon Brothers before the deadline.
- Whether any of the other bidders (Xyra Group, Innovest) or retailers such as Tesco make a move for some or all of Poundland’s shops.
Checked
12 claims in this story checked against 1 source: 12 supported.
Show each claim
- SupportedPoundland is restocking shelves as Gordon Brothers agrees to unlock £21m.Business | The Guardian: “Poundland’s under-fire US owners have released funds to help the stricken discount chain restock shelves temporarily”
- SupportedAbout 16m grocery items were dispatched to 600 shops in the UK and Ireland over the weekend.Business | The Guardian: “about 16m grocery items were dispatched to 600 shops in the UK and Ireland over the weekend.”
- SupportedGordon Brothers agreed to unlock £21m of the £50m it had been withholding.Business | The Guardian: “The US investment firm Gordon Brothers earlier agreed to unlock £21m of £50m that it had been withholding”
- SupportedPoundland must find a buyer by 26 November.Business | The Guardian: “giving it until 26 November to find a buyer.”
- SupportedSenior Poundland staff named the resupply operation “Operation Gloria” after the Gloria Gaynor song I Will Survive.Business | The Guardian: “In an emergency resupply effort codenamed “Operation Gloria” by senior Poundland staff”
- SupportedThe money will help Poundland pay staff and keep suppliers sending goods during the pre-Christmas trading period.Business | The Guardian: “The money will provide breathing space while rescue talks continue, ensuring that suppliers continue sending goods to branches during the crucial pre-Christmas trading period.”
- SupportedPoundland filed a notice of intention to appoint administrators at the end of last month, putting 12,000 staff and about 2,000 suppliers in uncertainty.Business | The Guardian: “Poundland filed a notice of intention to appoint administrators at the end of last month, throwing the fate of its 12,000 staff and about 2,000 suppliers into uncertainty.”
- SupportedPoundland and Gordon Brothers are heading for talks with potential buyers and business secretary Jonathan Reynolds.Business | The Guardian: “The company and Gordon Brothers are now heading for a frantic period of talks with potential buyers and the business secretary, Jonathan Reynolds.”
- SupportedGordon Brothers bought Poundland from Pepco last year for a nominal £1 and says it rescued the company when nobody else would.Business | The Guardian: “Gordon Brothers bought Poundland from the Polish retail group Pepco last year for a nominal £1 and claims to have rescued the company from collapse when nobody else would.”
- SupportedDocuments provided to MPs show Gordon Brothers took close to £20m in interest payments and fees since acquiring Poundland.Business | The Guardian: “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.”
- SupportedPoundland is in discussions with three potential buyers; Xyra Group Holdings and Innovest are understood to have relatively little chance of success.Business | The Guardian: “Poundland has said it is in discussions with three potential buyers. Bids from the investment groups Xyra Group Holdings and Innovest are understood to have relatively little chance of success.”
- SupportedA Gordon Brothers spokesperson said: “Funds will be released to allow payroll to be made in full this month, while additional funds continue to be released to support Poundland’s ongoing trading. While our preference remains a sale of the whole company, we are taking due care to ensure that any successful offer can provide the funds required to acquire the business and see it through to sustainable cash generation.”Business | The Guardian: “A Gordon Brothers spokesperson said: “Funds will be released to allow payroll to be made in full this month, while additional funds continue to be released to support Poundland’s ongoing trading. “While our preference remains a sale of the whole company, we are taking due care to ensure that any successful offer can provide the funds required to acquire the business and see it through to sustainable cash generation.””