Xyra offers partial debt payment in bid to rescue Poundland

Gordon Brothers rejected Martin Property Group bid that would have saved 12,000 staff

London-based Xyra Group, the second buyer to bid for Poundland, has offered to pay £12.5 million immediately toward the discount retailer’s £30 million loan, with the remainder deferred, as the company teeters on the brink of collapse with thousands of jobs at risk. US-based owner Gordon Brothers has already rejected an earlier offer from Irish property group Martin Property Group that would have saved the chain’s 12,000 staff, and remains in a sale process that includes Xyra’s proposal.

Sources familiar with the offer said Xyra was offering to pay off £12.5 million of the £30 million loan recorded on Poundland’s books immediately and defer the rest. The repayment addressed a key sticking point in takeover talks, and Xyra’s proposal would cover a higher proportion of Poundland’s outstanding debts than Martin Property Group’s earlier bid.

Gordon Brothers bought Poundland for £1 last June. The owner said the retailer had faced years of instability and “remains challenged and vulnerable.” The company said: “We are pursuing all avenues through the sale process to find a solution which protects as many jobs as possible and preserves value. Work continues at pace, engaging in active discussions on offers with interested parties.”

Xyra’s offer came as Business Secretary Jonathan Reynolds held crunch talks with Gordon Brothers about the future of the business, urging the investment firm to protect staff however possible. Gordon Brothers committed at the meeting to prioritize offers that would protect the retailer’s shops and workers.

Doubts remain about Xyra’s credibility because little public evidence shows the group meets Gordon Brothers’ tests, including whether it has the money and would be a good long-term owner. Sources familiar with the offer pointed to Andrew Brode’s appointment to Xyra’s board as a sign of credibility. Brode works for RWS, a company that provides AI solutions for businesses.

Judith MacKenzie, head of Downing Fund Managers, told the BBC that Brode is “well known and very credible” among small businesses in the UK. But she said there was “hardly any information” publicly available about Xyra. She added: “So, although some of the people look good, I can’t find any evidence to say that they’ve got the money to back it up yet.”

Xyra made its offer to acquire the entire business, but it remains unclear whether Poundland would stay together under Xyra’s ownership or be broken up.

Several suppliers have said they would also go bust if Poundland collapsed. Founder Steve Smith said two or three thousand suppliers that work solely for the retailer would be caught up in a collapse. He also said the company’s 12,000 staff would be affected and that up to 30,000 people could be affected overall.

Both Reynolds and Prime Minister Andy Burnham have questioned why a deal for Poundland’s future has not yet been made.

In a further statement, Gordon Brothers said: “Our intent throughout the comprehensive sale process has been to protect as many jobs as possible and preserve value in order to deliver the best available outcome for all the people, creditors and local communities who care about this business as much as we do.”