Express & Star

Race against time for Poundworld

Poundworld is facing a race against time to avoid collapse, with administrators on standby after a buyer walked away from talks to rescue the business.

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A buyer has walked away from talks to rescue Poundworld

The budget retailer is so low on cash that it might have to call in administrators within days, it is understood, putting around 5,300 jobs at risk.

The company as 355 shops nationwide, including branches at Bloxwich, the intu Merry Hill shopping centre in Brierley Hill, Hednesford, Lichfield, on the Reedswood Retail Park in Walsall, in Stafford and West Bromwich and two in Wolverhampton. A large branch in Walsall's Park Place Shopping Centre was closed in March.

Poundworld has been put up for sale by its private equity owner TPG Capital, but a potential buyer, Alteri Investors, has walked away from sale talks.

The company's management have said they are in talks with other potential buyers, and it is thought that Poundworld's founder, Chris Edwards, might take on the business.

However, the retailer's advisers at Deloitte are understood to be preparing contingency plans for an administration should talks collapse.

It is understands that during the sale process, which is being steered by Poundworld's lender Santander, the retailer has rejected offers to buy the business through a pre-pack administration.

However, with Alteri walking away from its bid, a sale through a pre-pack administration is still possible.

Poundworld's losses widened in 2016-17 to £17.1 million, from £5.4 million of losses the year before.

The retailer was hit with a £5.7 million charge for onerous leases, a provision retailers make when the cost of a lease is no longer covered by the income of the store.

Several retailers have shown significant financial distress this year, with both Maplin and Toys R Us disappearing from the high street.

In addition, Carpetright, Mothercare and New Look have all undertaken sweeping store closure programmes, while House of Fraser is putting together a rescue plan called a company voluntary arrangement, or CVA, which is expected to result in at least 20 of its 59 department stores shutting.

Restaurant groups including Carluccio's, Prezzo and Byron have also been shutting dozens of branches as they are squeezed by rising costs and a fall in consumer spending.