With Poundland now deep into transition, European discount retailer Pepco Group has been given the go-ahead to finance the restructuring of its former subsidiary as part of a sale agreement to Gordon Brothers.
Just approved by the High Court in England, it follows the group’s announcement it had completed definitive agreements to sell Poundland Group to 1903 Peach Bidco Ltd, a newly-formed company established by certain affiliates of Gordon Brothers International, on 12 June.
Under the sanctioned restructuring agreement, Pepco Group will provide Poundland with a new overdraft facility of up to £30 million. Meanwhile, unsecured loans by Pepco Group to Poundland will be repaid through the issuance of shares representing a minority investment interest in 1903 Peach Bidco.
“This will enable Pepco Group to participate in the longer-term value creation potential of Poundland”, it said.
Also, the maturity under its existing £30 million secured loan to Poundland will be extended to 1 September 2030.
As previously announced in June, Pepco Group completed the sale of the UK value chain Poundland to Gordon Brothers for a nominal fee of €1.
Since then, 12 UK Poundland stores have closed, including sites in Brigg, Canterbury, Coventry, Newcastle, Kings Heath in Birmingham, Orton Gate Shopping Centre in Peterborough, Castle Dene Shopping Centre in Peterlee, Rainham, Regent Retail Park in Salford, Sheldon, Wells, and Whitechapel in London.
The company aims to close 68 stores in total and, along with lease-expiry exits, the store network should go from about 800 to around 650-700 stores. Two distribution centres will also shut.
Pepco said the transaction enables the group to focus on the higher-growth and higher-margin eponymous business.
