Poundland has requested approval from a High Court judge for a restructuring plan aimed at preventing the company from entering administration. The budget retailer could face cash shortages by the end of the week if the plan is not sanctioned. Currently, Poundland employs about 14,700 staff across approximately 800 stores. It previously announced the closure of 68 shops following its acquisition by Peach Bidco, a subsidiary of private equity firm Gordon Brothers, for £1, putting around 1,000 jobs at risk.
During the court hearing, Poundland’s barristers indicated that the company’s financial forecasts suggest potential insolvency as early as September 7. Tom Smith KC, representing Poundland, stated that the retailer’s financial condition has substantially declined over the last two years, citing a challenging retail environment. If the restructuring is not approved, the directors are likely to consider administration by Friday.
Originally founded in Staffordshire in 1990, Poundland reported a pre-tax loss of £35.7 million in its last financial year. The company has faced challenges, including increased employer National Insurance contributions earlier this year. Smith noted that the turnaround plan would secure a significant cash injection for the company, aiming to raise an additional £60 million, complementing an earlier £30 million investment made after the recent acquisition, amounting to a total of £90 million from Gordon Brothers.
In addition to store closures, Poundland plans to shut its frozen and digital distribution site in Darton, South Yorkshire, and another warehouse in Springvale, Bilston, early next year. The company also intends to cease its online sales, which may result in the loss of 350 warehouse jobs. As part of the restructuring, the repayment period for £276.5 million in loans would be extended by three years, and the company would receive a £30 million overdraft facility along with reduced rents for its stores. Currently, no opposition has been raised against the proposed plan in court.
Source: https://www.bbc.com/news/articles/cdd3j3g0e5no?at_medium=RSS&at_campaign=rss