Poundworld at Wisbech among stores with uncertain future as bosses consider filing for administration
- Credit: Archant
Budget retailer Poundworld - with a massive store on the Cromwell Retail Park in Wisbech - is reportedly on the brink of announcing its intention to appoint administrators in a move which could put 5,300 jobs in jeopardy.
At least 30 of those jobs are in Wisbech where Poundworld became the first store to open on the Cromwell park in October 2014.
Two years later business was so brisk it was re-christened Poundworld Plus and offering an even bigger range of discount items.
Poundworld was founded in 1997 and has over 250 stores across the UK. It was recently the subject of popular BBC1 documentary ‘Pound Shop Wars’
But, as the Press Association reports tonight, the firm’s cash reserves are running low and it is considering filing the notice as it would give the business two weeks’ protection from creditors.
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Sources told PA that the notice would give Poundworld time to put together a deal – which could be undertaken through a controversial pre-pack administration – with private equity firm R Capital, former owner of Little Chef.
The administration is expected to be handled by Poundworld’s advisors Deloitte.
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Poundworld, which is owned by TPG Captial, had previously rejected offers to sell through a pre-pack but all options are now being considered.
Management has so far failed to sell the retailer as a solvent business, after turnaround specialists Alteri Investors walked away from sales talks this week.
Deloitte has been preparing contingency plans for an administration in the event of talks collapsing.
The news comes on the same day that House of Fraser announced that it is to axe 31 stores, putting 6,000 jobs at risk.
Poundworld’s losses widened in 2016-17 to £17.1 million from £5.4 million 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.
Just this morning department store giant House of Fraser announced plans to close half of its UK stores, putting 6,000 jobs at risk.
It comes just two weeks Marks and Spencer said continuing high street pressures were behind its decision to close 100 stores by 2022.