The owner of Poundland has agreed to release around £10m of funding in order to pay the firm’s suppliers a day before its bosses are grilled by the government.
Gordon Brothers, the US investment firm which owns the retail group, will unlock the funds held on Poundland’s balance sheet as the first in a series of payments, understands.
Gordon Brothers pledged earlier today to protect jobs at the embattled retailer after pressure from the business secretary and mounting political backlash over its handling of a sale process, a source told City AM.
The US investment firm met with Jonathan Reynolds this afternoon to discuss the future of the company and its 12,000 staff.
A source close to Reynolds said the minister had stressed the group “must do everything in [its] power to protect jobs and provide certainty for workers”.
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SUBSCRIBE HERESky News first reported the news of the injection for Poundland.
The source said Reynolds “is pleased to have secured this commitment from Gordon Brothers in the meeting and will continue to hold the company to account and closely monitor developments.”
revealed last week Poundland is on course for an £18m profit despite its owner pushing for a sale and claiming that the retailer remains “challenged and vulnerable”.
Industry sources said the release of funds is a “vital step” but warned it did not necessarily mean the discount retailer could avoid falling into administration as soon as this week, according to Sky News.
The move from Gordon Brothers comes after it was revealed on Monday that little-known investment firm, Xyra Group Holdings, emerged as a “frontrunner” to buy Poundland has called on Steve Smith, the retailer’s founder, to bolster its bid for the struggling firm.
The investment firm, founded by 23-year-old Manvedeep Singh, has asked Smith to lend support to their £12.5m bid to keep Poundland afloat as the discount retailer veers towards collapse.
Smith has had conversations with Xyra Group in recent days but does not plan to take part in any takeover efforts until a deal has been completed, it is understood.