Poundland rescue bid from Xyra Group amid collapse risk, Digi Mart USA News (United Kingdom): 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, a key sticking point in takeover talks so far, immediately. 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 that 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 future of the business, urging the investment firm to protect staff however possible.
Gordon Brothers, which bought Poundland for £1 last June, committed at the meeting to prioritize offers that 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. However, doubts remain about the credibility of Xyra’s offer, as there is little evidence it meets Gordon Brothers’ tests, including whether it has the money and would be a good long-term owner 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 that Brode is “well known and very credible” among small businesses in the UK.
However, 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 the future of Poundland has not yet been made. Though Xyra has made an offer to take over the whole business, it is unclear whether it would keep Poundland together as its owner 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 that work solely for Poundland would be caught up in the collapse.
He added that not only would Poundland’s 12,000 staff be affected in that case, but potentially up to 30,000 overall.
