The retailer has held talks with potential lenders – including Morrisons – to shore up the business, which has struggled during the pandemic due to supply chain problems, inflation and a heavy debt burden
Image: evening paper)
Supermarket chain Morrisons is reportedly considering plans to bail out McColl’s Retail Group to save more than 1,000 stores from collapsing.
The retailer’s takeover would include paying off its lenders in full and protecting the vast majority of its 1,100 stores and 16,000, Sky News reports.
Troubled convenience store chain McColl’s said last night it was “increasingly likely” it could go into administration.
The company, which is listed on the London Stock Exchange, employs approximately 16,000 people, or around 6,000 on a full-time basis, some of whom are managed by Morrisons.
It has over 1,100 convenience shops across England, Scotland and Wales.
The retailer has held talks with potential lenders to shore up the business, which has struggled during the pandemic due to supply chain problems, inflation and a heavy debt burden.
On Thursday, the company said it is “increasingly likely that the group will be placed under administration” if those talks are unsuccessful.
A spokesman for McColl’s said it was “increasingly likely” that the group would hire consultants.
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In a statement, describing itself as “the UK’s leading community retailer”, a representative said: “As previously announced on 25 April 2022, the group remains in discussions about potential financing solutions for the business to address short-term funding issues to solve and create a stable platform for future business.
“While no decision has yet been made, McColl’s confirms that unless an alternative solution can be agreed at short notice, it is increasingly likely that the group will be placed under insolvency administration with the aim of effecting a sale of the group to a third party buyer and securing the interests of creditors and employees.
“Even if a successful outcome is achieved, it will likely result in little or no value being placed on the Group’s common stock.”
The spokesman said a further update would be made “as appropriate”.
Asked about a report from Sky News that administrators could be brought in as early as Friday, he said there would be no comment beyond the statement made on Thursday.
Earlier this week it was revealed that the group’s shares are to be suspended from the London Stock Exchange as bosses said they were unable to sign off their accounts on time by auditors.
The company’s shares were already falling when it reported last month that talks with its lenders and banks would likely leave shareholders empty-handed in a rescue effort.
McColl’s has more than 1,100 stores in the UK but around 200 of its stores trade under the Morrisons Daily brand.
EG Group, the gas station giant controlled by Asda owners Mohsin and Zuber Issa, and private equity firm TDR Capital were also said to have been in talks about an offer earlier this year.
In November, McColl’s announced it would increase Morrisons Daily conversions from 350 to 450 in a year.
The company raised £30million from shareholders in a cash call just seven months ago.
Jonathan Miller, McColl’s chief executive, said in December that the fiscal year was “undoubtedly a tough year for the company, ending with widespread and ongoing supply chain challenges.”
The retailer was already struggling before the pandemic.
“While we were able to partially mitigate these external factors, they still had a significant impact on underlying trading,” he added.
It is understood Mr Miller personally invested £3million in fundraising to save the company last summer.
https://www.mirror.co.uk/money/mccolls-admits-administration-increasingly-likely-26888722 Morrisons in McColl's 'bailout talks' as chain warns 1,100 stores are at risk