Poundworld is in crisis discussions to secure an emergency private equity funding, as the advisers of the retailer draw up plans for its collapse if the discussions break down.
The budget retailer is close to securing a rescue deal with Alteri Investors, a private equity buyout fund, in an effort which could initiate a major reorganisation of the firm.
Alteri is backed by Apollo Management. According to Sky News, it is already finalising the terms of a takeover.
The said deal is set to include a nominal sum that is set to be paid for Poundworld to its current owner, TPG, and its creditors.
However, the takeover is not assumed to stop the plans to close down as many as 100 Poundland stores. Once Alteri takes control, it is anticipated to launch the restructuring programme immediately, which is considered to be the latest in a series of company voluntary arrangements (CVAs).
Around 1,500 of the 5,300 employees of Poundworld are likely to lose their jobs as an outcome of the process.
In an internal memo that was sent to employees last Friday, Steve Johnson, the executive chairman of the company, stated: “Whilst there is no confirmed outcome at this point, please be aware that the discussions are progressing in a positive way, and as a result we anticipate being able to confirm a positive update next week.”
The takeover will add to series of closures that occurred on the high street so far this year, setting 2018 on course to be considered the worst year for closures since 2008.
House of Fraser is also set to trim down its portfolio, after it announced its own CVA which is anticipated to launch in the next two weeks.
Meanwhile, this week also saw the approval of two more: Carluccio’s and Mothercare.
However, there are signs that the series of CVAs is starting to cause tension in the wider retail industry, with Next asking for rent reductions that are on par with its struggling neighbours and M&S joins the battle against rising rents on the high street.