Morrisons is reportedly considering plans to save the McColl’s Retail Group, saving over 1,000 stores from collapse.
The supermarket chain’s rescue bid would include repaying lenders in full and protecting the vast majority of the retailer’s 1,100 shops.
Convenience store chain McColl’s last night said that it was “increasingly likely” it could fall into administration, The Mirror reports.
The company, which is listed on the London Stock Exchange, employs around 16,000 staff, or roughly 6,000 on a full-time basis, some of which are run by Morrisons.
It has over 1,100 convenience shops across England, Scotland and Wales.
The retailer has been in discussions with potential lenders to shore up the business, which struggled badly during the pandemic due to supply chain issues, inflation and a heavy debt burden.
On Thursday, the company revealed that unless those talks are successful, it is ‘increasingly likely that the group would be placed into administration’.
A spokesman for McColl’s said it is “increasingly likely” the group will hire advisors.
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”.
Asked about a report by Sky News that administrators could be called in as early as Friday, he said there would be no comment beyond the statement issued on Thursday.
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.
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 petrol stations giant controlled by Asda owners Mohsin and Zuber Issa and the private equity firm TDR Capital, are also said to have held discussions about making an offer earlier this year.
In November, McColl’s announced that it would expand the number of Morrisons Daily conversions from 350 to 450 within 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 financial year had “undoubtedly been a tough year for the business, ending with the widely reported and ongoing supply chain challenges.”
The retailer had already been previous struggling to the pandemic.
“Although we have been able to partly mitigate these external factors, they have still had a significant impact on underlying trading,” he added.
Mr Miller is understood to have invested £3million personally in the fundraising last summer in a bid to save the business.
Don’t miss the latest news from around Scotland and beyond – Sign up to our daily newsletter here.
George Holan is chief editor at Plainsmen Post and has articles published in many notable publications in the last decade.