Poundland seeks legal advice after owner limits funding, raising administration fears

Poundland's chief executive, Barry Williams, told staff on Tuesday night that its owner, Gordon Brothers, has limited the retailer's access to a key lending facility under the existing loan agreement. Williams described the restriction as “unexpected, unwanted and wholly avoidable” and said the company is seeking legal advice on the appropriate next steps.

In a letter to the chain's 12,000 employees, Williams wrote, “I’m disappointed to have to tell you that Gordon Brothers have restricted access to funds that we would in normal circumstances expect to access fully under our existing loan agreement.”

The funding cut comes as three independent directors – Andrew Kirkpatrick, Stephen Welch and Dominic Young – resigned in protest of Gordon Brothers' attempts to place the business into administration. The dispute centers on whether Poundland will be sold as a whole to a new owner or broken up and sold in parts.

Management has supported an offer from Ireland's Martin Property Group, describing it as a “fully-funded, ready-to-go bid” that would keep the business operating. Gordon Brothers rejected the proposal, citing disagreement over the upfront payment. The firm seeks full repayment of a £30 million loan it acquired for £1 from former owners Pepco, while Martin Property Group is prepared to pay only half of the amount upfront, with the remainder deferred for two years.

Business Secretary Jonathan Reynolds is reported to have asked Gordon Brothers about its intentions, but both parties declined to comment.