Poundland staves off immediate collapse as emergency talks continue

Bosses at Poundland have this morning held a board meeting to determine the firm's future after its owners extended the deadline to secure a buyer. This week, owner Gordon Brothers told a committee of MPs they were in favour of extending the deadline to secure a buyer for the company, which was due to expire at midnight. It represents a last-ditch effort to stave off the discount chain's immediate collapse, and with it Poundland's 600 shops and 10,500 employees.But Barry Williams, managing director of Poundland, said there were 'no guarantees' jobs would be saved ahead of the talks. Mr Williams, who met MPs alongside Gordon Brothers in private on Wednesday, said they were able to 'share some more detail - we left them with some facts.' Liam Byrne MP, who chairs the business committee, said it had been 'one of the most extraordinary evidence sessions I have ever seen,' accusing the retailer's owners of 'behaving almost like a Wolf of Wall Street, rampaging the British high street.' In the balance: Bosses at Poundland have held a board meeting to determine the firm's futurePoliticians and retail veterans previously warned the demise of the company exposes a worrying trend that has seen private equity vultures prey on household names across Britain. Poundland has been edging towards administration after Gordon Brothers rejected a rescue bid for Poundland – sparking fears it is trying to sell the group off piecemeal rather than secure its future. Meanwhile, the private equity firm has also frozen approximately £50million of the retailer's cash, leaving bosses unable to restock shelves. Gordon Brothers has released around £11million and committed further funds next week to enable the retailer to continue operations. It has been reported that Gordon Brothers is assessing three offers, including one from the little-known Xyra Group Holdings, to acquire Poundland in its entirety. But if no rescue deal comes to fruition, the chain and its components would most likely be broken up, with other retailers potentially snapping up batches of shops. Richard Hunter, head of markets at Interactive Investor, told This is Money: 'The clear fly in the ointment remains the owners, who seem to be favouring selling the store estate and its stock piecemeal rather than accepting any bids for the business as a whole. 'The clock is ticking quickly and the outcome will be determined by the stance of the owners.'More broadly, the rebirth of the high street is a tough nut to crack. The pandemic firmly entrenched online shopping as the preferred route for consumers, although Poundland’s value offering would continue to appeal to an increasingly cash-strapped consumer if a rescue can be found.' Julie Palmer, managing partner at BTG, said: 'A further two weeks of protection, subject to court approval, is good news for Poundland’s staff, suppliers, and customers. 'It gives the credible bidders time to firm up their offers and could yet avoid an administration in the run-up to Christmas.'She added: 'But time alone won’t save the business. A sale now depends on Poundland having proper access to its cash so it can restock for Christmas, and on the bidders producing funded, deliverable offers.'The gap between what’s on the table and what’s owed to the shareholders is the sticking point. 'If the owner is prepared to accept a solvent deal rather than hold out for full recovery, as Pepco has signalled it is, the chances of a sale are materially better than they were 24 hours ago. These next two weeks are critical.'Poundland has been battling against rivals like B&M and Home Bargains, but its performance has improved in the past year. Steve Smith, Poundland's co-founder, said the retailer looked set to report between £18million and £20million of earnings before interest, taxes, depreciation and amortisation. Last year, Gordon Brothers purchased Poundland for less than £1. DIY INVESTING PLATFORMSAJ BellAJ BellEasy investing and ready-made portfoliosHargreaves LansdownHargreaves LansdownFree fund dealing and investment ideasinteractive investorinteractive investorFlat-fee investing from £4.99 per monthFreetradeFreetradeInvesting Isa now free on basic planTrading 212Trading 212Free share dealing and no account feeAffiliate links: If you take out a product This is Money may earn a commission. These deals are chosen by our editorial team, as we think they are worth highlighting. This does not affect our editorial independence.Compare the best investing account for you