Poundland-owner closes in on sale of struggling discount chain

Poundland's parent company is preparing to hand over tens of millions of pounds to help fund a takeover of the struggling British discount chain.

Sky News has learnt that Warsaw-listed Pepco Group is expected to contribute a substantial eight-figure sum to finance Poundland's ongoing operations as part of a deal with Gordon Brothers which could be finalised as soon as this week. Sources close to the process insisted on Tuesday that a deal had yet to be formally agreed and that it was not yet certain to take place, with other outcomes still possible.

Money latest: My insurance firm charged me £700 after my dog died - is this right? The Sunday Times tipped Gordon Brothers as a frontrunner to buy Poundland last month. If a transaction between Pepco and Gordon Brothers, the former owner of Laura Ashley, is struck, it will pave the way for substantial job losses triggered by the likely closure of well over 100 Poundland stores across the country.

That figure could ultimately reach between 150 and 200 shops, putting thousands of jobs at risk. Steep rent cuts are also expected to be negotiated with Poundland landlords, the Telegraph reported at the weekend.

Gordon Brothers is said to have seen off competition from Hilco Capital to emerge as the frontrunner to secure a deal in recent days. At least one other party is thought to have been interested in bidding in recent weeks, while other suitors - including the new owner of WH Smith's high street chain, Modella Capital - were eliminated earlier in the process.

One person close to the situation said it was conceivable that an agreement to sell Poundland to Gordon Brothers could be announced as early as Wednesday morning, with a formal restructuring plan potentially following shortly afterwards. Poundland employs roughly 16,000 people across an estate of over 800 shops in the UK and Ireland.

Tax hikes announced by Rachel Reeves, the chancellor, in last autumn's budget have increased the financial pressure on high street retailers. In recent months, chains including Lakeland and The Original Factory Shop have changed hands amid challenging circumstances.

Last weekend, Sky News revealed that River Island, the family-owned clothing retailer, was also working with advisers on a restructuring plan, with store closures and job losses possible. Pepco said last month that underlying earnings at Poundland could be wiped out in the current financial year, underlining the scale of the challenge facing a new owner.

Read more from Sky News:Unemployment rate highest in four yearsPaternity pay in UK 'among lowest in developed world'Government commits £14.2bn to new nuclear power station In a statement issued to Sky News, a Pepco spokesperson said: "The focus of the Group and advisers is currently on a potential sale of Poundland. "This is an ongoing process, and no final decisions have been taken." Neither Gordon Brothers nor Teneo, which is handling the sale process, could be reached for comment..