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Poundworld under threat again as rescue deal fails

Poundworld store

The discount chain Poundworld, with over 350 stores risks administration after Alteri Investors, the leading contender to acquire it reportedly pulled out of negotiations.

Alteri known for investing in distressed retailers, was reported earlier this week to be close to agreeing on a rescue deal with Poundworld’s owners TPG. However, according to Sky News, Alteri has now walked away from a deal with the struggling discount chain which would have saved hundreds of jobs.

Last month, Poundworld revealed plans for a company voluntary arrangement (CVA) which would lead to the closure of 117 Poundworld shops by August 31, according to documents seen by The Grocer, and the loss of around 1500 of its 5300 staff.

Other parties are understood to still be in talks with TPG over a potential rescue deal, including US firm Flacks, although they are not thought to be a serious contender.

In May, Poundworld placed its CVA plans on hold opting to try and sell a chunk of the company, drafting in Deloitte to help find a buyer. Under the prospective sale to Alteri, the 117 stores closures and rent reductions would have gone ahead.

Its financial turmoil has been worsened by the recent withdrawal of its credit insurance, which subsequently led to suppliers demanding £6 million in payments immediately, also impacting on the company's in-store availability.

The Brexit-hit sterling, rising overheads including business rates and wages, as well as falling consumer spend were all also cited as reasons for its financial difficulties.

Source: Insight DIY Team

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07 June 2018

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