British MPs urge government to protect Poundland — The Guardian
Members of the UK Parliament have called on the government to protect discount retailer Poundland and other shops on high streets from what they described as predatory capitalism and asset stripping. The future of the company and its 12,000 employees remains uncertain after the chain’s owners filed a notice with the High Court of their intention to appoint administrators.
Pressure on the chain’s owner
US company Gordon Brothers, which controls Poundland, has engaged consulting firm AlixPartners to conduct the process. During an urgent question in the House of Commons, Labour MP Gareth Snell said the government must make Gordon Brothers understand that its approach to the company is unacceptable.
Another Labour MP, Antonia Bance, asked whether the government planned to review corporate governance and insolvency rules so that they better protect workers and high streets from asset stripping and short-term financial transactions. Green Party MP Hannah Spencer also accused private equity of burdening retail brands with debt.
Sale negotiations
As The Guardian reports, Minister for the Future of Work Kate Dearden said officials held talks with Gordon Brothers on Monday evening. She was due to meet Poundland management and the Usdaw retail workers’ union, while Business Secretary Jonathan Reynolds was planning a further meeting with Gordon Brothers.
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Dearden stressed that the government cannot intervene in commercial negotiations with potential buyers or comment on individual bids. At the same time, she said Gordon Brothers must recognise its responsibility to Poundland and its employees.
According to the publication, Gordon Brothers is in talks with at least two potential buyers for the entire company. Northern Ireland’s Martin Property Group offered about £15 million, but was to pay only half of the sum upfront. As The Guardian reports, Gordon Brothers is unlikely to want to accept the offer because it would not allow the repayment of a £30 million shareholder loan. Suppliers are already holding back deliveries to the chain, complicating its operations.
In a letter to the government, Gordon Brothers chief executive Mark Newton-Jones said that after acquiring Poundland for £1 last year, the company provided the chain with an additional £85 million in funding, and the retailer returned to underlying profitability. At the same time, he noted that Poundland still does not generate stable cash flow due to inflation, rising staff costs and substantial losses from shop theft.
