Second buyer makes rescue bid for Poundland as retailer faces collapse
A second buyer has made a rescue bid for Poundland as the discount retailer teeters on the brink of collapse, with thousands of jobs at risk.
London-based Xyra Group has offered to pay off half of Poundland's outstanding debts immediately, a key sticking point in takeover talks so far. The rest would be deferred.
With Poundland close to collapse, US-based owners Gordon Brothers have already rejected a rival bid from an Irish property group which would have saved its 12,000 staff.
Gordon Brothers said the business has faced years of instability and "remains challenged and vulnerable".
Sources familiar with the offer said Xyra is offering to immediately pay off £12.5m of an outstanding £30m loan on Poundland's books.
The offer came as Business Secretary Jonathan Reynolds held crunch talks with Gordon Brothers about the business's future, urging the investment firm to protect staff wherever possible.
Gordon Brothers, which bought Poundland for £1 last June, committed at the meeting to prioritise offers which protect its shops and workers.
The company said: "We are pursuing all avenues through the sale process to find a solution which protects as many jobs as possible and preserves value. Work continues at pace, engaging in active discussions on offers with interested parties."
Xyra is offering to pay off a higher proportion of Poundland's outstanding debts than Martin Property Group, which previously submitted a bid that Gordon Brothers rejected.
But doubts remain about the credibility of Xyra's offer, as there is little evidence they meet Gordon Brothers' tests, including whether they have the money and whether they would be good long-term owners of Poundland.
Sources pointed to the appointment of Andrew Brode to Xyra's board as a sign of its credibility. Brode works for RWS - a company that provides AI solutions for businesses.
Judith MacKenzie, head of Downing Fund Managers, told the BBC Brode is "well known and very credible" among small businesses in the UK.
But she said there is "hardly any information" publicly available about Xyra. "So, although some of the people look good, I can't find any evidence to say that they've got the money to back it up yet," MacKenzie added.
Gordon Brothers said: "Our intent throughout the comprehensive sale process has been to protect as many jobs as possible and preserve value in order to deliver the best available outcome for all the people, creditors and local communities who care about this business as much as we do."
Both Reynolds and Prime Minister Andy Burnham have questioned why a deal for Poundland's future has not yet been made.
Though Xyra offered to take over the whole business, it is unclear whether it would keep Poundland together or break the company up.
Several Poundland suppliers have said they would also go bust if the retailer collapses. Its founder, Steve Smith, said two or three thousand suppliers to the firm, those that work solely for Poundland, would be caught up in the collapse.
He added that, in that case, not only would Poundland's 12,000 staff be affected, but potentially up to 30,000 overall.
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