Retailer McColl’s ‘increasingly likely’ to call in administrators
The convenience store chain McColl’s has said it is increasingly likely to call in administrators as it battles to secure a rescue deal with 16,000 jobs in the balance.
The UK-listed retailer, which has more than 1,100 small shops around the UK including about 250 Morrisons Daily outlets and a number of Martin’s, said any rescue was likely to result in “little or no value” being attributed to its shares.
McColl’s traces its roots back to 1901 when a Scottish footballer, Robert Smyth McColl, opened the first RS McColl in Glasgow. The modern business began in 1973 as a vending machine operator and went on to buy several convenience store chains before focusing solely on retail in 2000.
While many convenience stores thrived during the pandemic as families chose to shop closer to home and avoid large supermarkets, McColl’s smaller stores did not fare as well.
McColl’s has been in talks with its lenders, the Morrisons supermarket group and other parties, thought to include the Issa Brothers who own Asda and the EG petrol station group, since November after suffering from supply difficulties and poor sales.
Morrisons, which was bought out by the US private equity group Clayton, Dubilier & Rice last year, is seen as a likely saviour for several hundred outlets but is not thought to be interested in buying the entire business.
PwC, which has been advising McColl’s consortium of lenders including the Silverpoint hedge fund, is understood to be lining up to handle any administration. A so-called pre-pack deal would allow Morrisons to take on the stores it wants without McColl’s smaller newsagents and its pension scheme.
On Thursday McColl’s said: “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.”
Last month the company warned again of “short-term funding issues”, reduced consumer spending, and continued supply chain disruption across the industry. Then this week McColl’s said it was delaying publication of its annual results as it continued discussions about “finding a solution for the business”.