Zayra Group makes second acquisition offer to save Poundland

Discount retailer Poundland is currently on the brink of collapse, and a second buyer has placed a bid to save it. London-based Zayra Group has offered to immediately pay half of Poundland's outstanding debts, which had been the primary obstacle in takeover talks so far. The remaining amount would be deferred.

According to a BBC report, Zayra Group is offering to immediately pay £12.5 million out of the £30 million loan on Poundland's books. Previously, a rival bid by an Irish property group was rejected by the US-based owners, Gordon Brothers, a bid that could have saved 12,000 staff.

Gordon Brothers stated that the business has faced instability for years and remains "challenging and weak." Meanwhile, Business Secretary Jonathan Reynolds held significant discussions with Gordon Brothers and requested the investment firm to protect the staff. Gordon Brothers, who purchased Poundland for £1 last June, expressed commitment during this meeting to prioritise offers that protect stores and workers.

The company said, "We are exploring all avenues through the sale process to save as many jobs as possible and preserve value. Active discussions on offers with interested parties are proceeding rapidly." Zayra Group is offering to pay a higher percentage of Poundland's outstanding debt than the Martin Property Group, whose bid was previously rejected by Gordon Brothers.

However, there are doubts regarding the credibility of Zayra's offer, as there is little evidence whether they pass Gordon Brothers' tests, such as whether they have sufficient funds and if they can be long-term owners. The appointment of Andrew Broad to Zayra's board is seen as a signal of its credibility. Broad works for RWS, a company that provides AI solutions for businesses.

Judith Mackenzie, head of Downing Fund Managers, told the BBC that Broad is "very well known and trusted" in the UK's small business sector. However, she added that there is "very little information" publicly available about Zayra, so while some may look good, there is no evidence they have the money to support it.

Gordon Brothers stated that their intention is to save as many jobs as possible and preserve value to bring the best outcome for all stakeholders, creditors, and local communities. Both Prime Minister Andy Burnham and Jonathan Reynolds have questioned why no deal has been reached yet for Poundland's future. Zayra has offered to buy the entire business, but it is unclear whether it will keep the company as one or split it.

Poundland founder Steve Smith stated that if the retailer collapses, its two to three thousand suppliers, who work exclusively for Poundland, will also go bankrupt. He added that in this case, not only 12,000 staff but potentially a total of 30,000 people would be affected.