Poundworld facing administration: 355 stores risk closure and 5300 jobs threatened

Poundworld in Dartford's Orchard Centre faces uncertain future

Poundworld in Dartford's Orchard Centre faces uncertain future

Carpetright (Other OTC: CGHXF - news), Marks & Spencer (Frankfurt: 534418 - news), Mothercare (Other OTC: MHCRF - news) and New Look are among the other retailers which have announced store closure plans this year, with thousands of jobs disappearing as a outcome.

The notice will give Poundworld time to structure a deal, which could be undertaken through a pre-pack administration, with private equity firm R Capital, former owner of Little Chef.

Up until Wednesday night, it had been in talks with Alteri Investors, a group which specialises in turning around struggling businesses.

On Thursday the retailer, which has 5,000 staff, filed a notice of intention to appoint an administrator.

If a solvent sale of Poundworld cannot be agreed, the business could be sold through a pre-pack administration or collapse outright, underlining the urgency of rescue talks which are being led by Deloitte, the professional services firm.

However, adviser Deloitte is also understood to be preparing contingency plans if a buyer is not found.

Hopes of securing a buyer for the discount chain collapsed on Wednesday night
Hopes of securing a buyer for the discount chain collapsed on Wednesday night

The stores suffered a major rise in multi-million pound losses a year ago - rising from £5.4m to £17.1m in 2016/17.

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.

He sold out to TPG for £150m, and later took over at rival Poundstretcher. Poundworld losses in 2016/17 were £17.1m.

About 100 of Poundworld's outlets were already under threat of closure.

Several retailers have shown significant financial distress this year, with both Maplin and Toys R Us disappearing from the high street.

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Poundworld falls into administration, putting 5,000 jobs at risk
The collapse puts more than 5,000 jobs at risk, making it the biggest retail insolvency so far this year by job numbers. A spokesman for TPG said putting the business into administration was a "difficult decision".

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