The B&J board originally endorsed refinancing proposals from the millionaire husband and wife team Gerald and Vera Weisfeld, but last night directors unanimously backed a plan for Pepkor to inject up to pounds 56.2m. 'Pepkor is simply the better deal,' a spokesman said.
B&J shareholders were to vote on the Weisfelds' proposals at an extraordinary general meeting on Monday, now likely to be adjourned. Pepkor's initial investment will be about pounds 20m - payment of pounds 500,000 for 12.5 million new shares at 4p, pounds 7.5m in convertible loan notes, and a pounds 12m trade finance agreement. The company also has options on 128 million new shares for a total of between pounds 3.2m and pounds 9.6m. Pepkor's total investment could give it 63 per cent of B&J.
Pepkor will take three seats on the board. John Jackson will step down as B&J's chairman but remain a non-executive. He will be replaced by Christo Wiese, head of Pepkor. Ian Gray, B&J's chief executive, and Bob Ellis, finance director, remain in their jobs. The Weisfelds, whose What Everyone Wants clothing chain later became Amber Day, were offering to inject pounds 6m into B&J in return for 19 per cent and two seats on the board. They had been negotiating with B&J since at least March when the company, which owns 220 Poundstretcher stores employing 4,000 people, announced it had failed to secure a pounds 14m working capital facility from its bankers.
The couple could not be contacted last night, but had previously accused Pepkor of knowing nothing of UK retailing. They are unlikely to be pleased that their proposals were scuppered at the last minute, though they could come forward with a renewed offer.
Pepkor already owns 40 Your More Store shops in Scotland, Poundstretcher's heartland. The company tried to buy Poundstretcher from Lowndes Queensway in 1988 but was beaten by B&J.