Former West Midlands Mayor Andy Street has called for an explanation from Poundland bosses as the Walsall-based company teeters on the brink of collapse. The discount chain filed a notice of intent to appoint administrators on Thursday, creating uncertainty for its 10,000 staff. Poundland operates around 600 stores in the UK, including several in Birmingham and across the wider West Midlands.
What the notice of intent means
The notice of intent is a legal step before a company enters administration and protects a firm from creditor action for 10 days while it attempts to find a solution. Poundland said the move was made "in order to bring stability", adding that it would be "working closely with our advisors to identify and deliver the best possible outcome."
A statement from the Board of Poundland Ltd, issued on Thursday, said: "Over the past two months, initially prompted by interest from several parties, we have been working on a formal sale process for Poundland. Despite enormous efforts it has not been possible to identify an acceptable offer for the business as a whole."
Sale process and offers
The board added: "The process has however attracted several established retail operators who have made formal offers. Collectively these cover a significant part of the business and, we believe, offer the best available prospects for shareholders, creditors and to preserve jobs. We recognise any sale process creates uncertainty and particularly when set against a challenging UK economic environment. We thank all stakeholders, and in particular our people for their support during this period."
"In order to bring stability, we have today filed a Notice Of Intention (NOI) to appoint representatives of AlixPartners as Administrators to the business. The filing of the NOI creates an immediate ten working day legal moratorium during which we will be working closely with our advisors to identify and deliver the best possible outcome. Our stores remain open as normal, and we thank our staff, suppliers and customers for their continued support."
Political reaction and next steps
Sky News reported on Friday that the preferred bidder remained interested in a rescue deal. Gordon Brothers, the US investor that bought the 600-store Poundland chain for £1 last summer, reportedly rejected a bid from Northern Ireland's Martin Property Group earlier this week.
Managing director Barry Williams told staff that the owners had cut off a vital supply of funding despite Poundland's strong sales. The decision has raised questions over the handling of the business, with Prime Minister Andy Burnham saying: "If there was a potential owner to avoid this that hasn't been accepted, then the business secretary and I want to know why that is the case. We stand ready to support the workforce however we can."
Former West Midlands Mayor Andy Street has also spoken on the issue on social media, saying: "The apparent dismantling of Poundland, a Walsall-based business, is disgraceful. Why has a viable bid been rejected in favour of breaking up the business? The owners must be called in to explain this. Poundland must be saved to protect thousands of jobs."
