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Poundworld in last-ditch rescue talks

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A former owner of Little Chef is trying to cook up a last-ditch rescue deal for Poundworld amid increasingly bleak prospects for the bargain retailer and its 5,300 staff.

Sky News has learnt that Rcapital has been holdings talks with TPG Capital, Poundworld’s owner, for the last 48 hours even as the company prepares to begin a legal process paving the way it to fall into administration.

Sources said that Rcapital had entered the fray even as rival turnaround firm Alteri Investors had pulled out of rescue talks with Poundworld.
The prospects of a deal involving Rcapital were put at no more than 50-50 by one insider, with Poundworld said to be planning to file a notice of intention to appoint administrators as soon as Thursday.
One insider said either Deloitte or BDO would act as administrator.
Such a move would buy the high street chain an additional ten days’ protection from creditors as it seeks to tie up a rescue.
Any takeover would nevertheless involve the closure of well over 100 stores and lead to thousands of job losses.
The news compounds another bleak day for the retail sector with House of Fraser confirming plans earlier on Thursday to axe 6,000 jobs and close just over half its 59 stores.
Failure to successfully conclude a deal with creditors will lead to HoF plunging into administration, it warned in an announcement about its restructuring.

If a solvent sale of Poundworld cannot be agreed, the business could be sold through a pre-pack administration or collapse outright, underlining the urgency of rescue talks which are being led by Deloitte, the professional services firm.
TPG opted to put Poundworld up for sale last month rather than funding it through a restructuring programme that will involve the loss of about 1,500 jobs.
The grim climate on the high street, which has claimed casualties such as Maplin and Toys R Us UK this year, has paved the way for a string of chains to attempt restructurings through a mechanism called a Company Voluntary Arrangement (CVA) – a legally binding agreement with creditors.
Carpetright, Marks & Spencer, Mothercare and New Look are among the other retailers which have announced store closure plans this year, with thousands of jobs disappearing as a consequence.
A CVA at Poundworld would, if approved by creditors, lead to its store estate being reduced to around 250 shops with 4,000 employees.

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The series of corporate crises on the high street have led the Government to establish a new industry council, jointly chaired by the former Co-op Group chief executive Richard Pennycook, to devise ways of easing retailers’ pain.
Rcapital, Poundworld and TPG declined to comment.

Source: SKY