McColl’s store chain has said it is looking “increasingly likely” the 1,400 store group will fall into administration unless an alternative funding solution is reached
Image: McColl’s Retail Group)
McColl’s store chain has confirmed it is on the brink of collapse and could fall into administration, jeopardizing thousands of jobs.
The convenience store business has been in discussions with potential lenders to help shore up the business.
The 1,400 store group was crippled by the Covid pandemic, then supply chain issues, inflation and a heavy debt burden.
It said that unless those talks are successful, it is “increasingly likely that the group would be placed into administration.”
More than 16,000 people are employed by McColl’s, which also has a partnership with Morrisons.
In a statement in which it described itself as “the UK’s leading community retailer”, a representative said: “As previously disclosed on April 25, 2022, the group remains in discussions regarding potential financing solutions for the business to resolve short-term funding issues and create a stable platform for the business going forward.
“However, whilst no decision has yet been made, McColl’s confirms that unless an alternative solution can be agreed in the short term, it is increasingly likely that the group would be placed into administration with the objective of achieving a sale of the group to a third-party purchaser and securing the interests of creditors and employees.
“Even if a successful outcome is achieved, it is likely to result in little or no value being attributed to the group’s ordinary shares.”
The spokesman said a further update would be made “as and when appropriate”.
Earlier this week, it was revealed the group was set to have its shares suspended from the London Stock Exchange as bosses said they would be unable to get its accounts signed off by auditors in time.
Shares in the company had already plunged as it reported last month that talks with its lenders and banks would likely leave shareholders empty-handed under rescue efforts.
Sky News reported that Morrisons had proposed a deal to McColl’s lenders which involved the supermarket giant injecting funding.
Last year, McColl’s successfully raised £30million from shareholders to invest in the expansion of its Morrisons Daily convenience stores.
Around the same time it came under allegations from the government for failing to pay some of its workers minimum wage.
Pret, McColl’s and Welcome Break said the underpayments were historic errors and staff had been swiftly reimbursed.
The businesses were made to pay back the money as well as being fined a massive £3.2m over breaches, such as deducting pay from wages for uniforms and expenses, or failing to pay the correct apprenticeship rate.
George Holan is chief editor at Plainsmen Post and has articles published in many notable publications in the last decade.