Poundworld faces administration - and 5,300 staff face an uncertain future

House of Fraser, Chichester. Photo by Derek Martin SUS-160911-095126008

Jobs at House of Fraser in Chichester to be axed as shop is earmarked for closure

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Poundworld is poised to announce its intention to appoint administrators, putting around 5,300 jobs at risk.

The budget retailer, which employs around 5,300 people, is low on cash and is filing the notice because it will give the business protection from its creditors for two weeks.

A Poundworld store

A Poundworld store

Sources told the Press Association that the notice will give Poundworld - which has stores in London Road, Portsmouth, Gosport High Street and the Meridian Centre in Havant - time to structure a deal, which could be undertaken through a pre-pack administration, with private equity firm R Capital, former owner of Little Chef.

The administration will be handled by Poundworld’s advisers Deloitte.

Poundworld, which is owned by TPG Captial, had previously rejected offers to sell through a pre-pack but all options are now being considered.

Management has so far failed to sell the retailer as a solvent business, after turnaround specialists Alteri Investors walked away from sales talks this week.

Deloitte has been preparing contingency plans for an administration in the event of talks collapsing.

The news comes on the same day that House of Fraser announced that it is to axe 31 stores, putting 6,000 jobs at risk.

READ MORE: Chichester House of Fraser will close with loss of 166 jobs

Poundworld’s losses widened in 2016-17 to £17.1m, from £5.4m of losses the year before.

The retailer was hit with a £5.7m charge for onerous leases, a provision retailers make when the cost of a lease is no longer covered by the income of the store.

Several retailers have shown significant financial distress this year, with both Maplin and Toys R Us disappearing from the high street.