Convenience chain McColl’s goes bust to put 1,100 shops and 16,000 jobs at risk
Convenience chain McColl’s goes bust to put 1,100 shops and 16,000 jobs at risk
McColl’s has struggled financially in recent years after witnessing soaring costsIt has suffered from supply chain disruption, inflation and its large debt burden Its discussions with lenders collapsed as creditors refused to extend a deadline Morrisons tabled a last-minute rescue deal to save chain and approached PwC
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Convenience chain McColl’s confirmed this afternoon that it has gone bust and will appoint administrators, putting 1,100 shops and 16,000 jobs at risk.
The Brentwood-based company said discussions with its lenders collapsed today as creditors refused to extend a deadline for the retailer to find more cash.
McColl’s has struggled financially in recent years after witnessing soaring costs due to supply chain disruption, inflation and its large debt burden.
Shares in the firm were suspended earlier this week after the company delayed the publication of its latest financial results due to its financing talks.
It comes after Morrisons tabled a last-minute rescue deal to save it and approached PriceWaterhouseCoopers, who are advising lenders to McColl’s.
Convenience chain McColl’s runs more than 1,100 shops in England, Scotland and Wales
The move would have saved the vast majority of jobs and stores.
A rescue deal would have also taken on the business as a going concern, absorbed its debts of over £100 million and taken responsibility for its pension scheme.
The two businesses have become major partners, with McColl’s operating hundreds of convenience shops under the Morrisons Daily brand.
It is understood that Morrisons is still interested in a takeover, while Sky News has reported that forecourt giant EG Group is interested in a deal.
McColl’s said in a statement to the London Stock Exchange this afternoon: ‘In order to protect creditors, preserve the future of the business and to protect the interests of employees, the board was regrettably therefore left with no choice other than to place the company in administration, appointing PriceWaterhouseCoopers as administrators, in the expectation that they intend to implement a sale of the business to a third-party purchaser as soon as possible.’
The Essex-based business has some 16,000 employees, the majority of whom are part-time
McColl’s, which says on its website that it manages four million transactions every week, will apply to the court later today to appoint the administrators.
Earlier this week, it was revealed the group was set to have its shares suspended as bosses said they would be unable to get its accounts signed off by auditors in time.
Shares had already plunged as it reported last month that talks with its lenders and banks would likely leave shareholders empty-handed under rescue efforts.
The business has some 16,000 employees, the majority of whom are part-time, and runs more than 1,100 convenience shops across England, Scotland and Wales.
Morrisons claimed its rescue proposal for McColl’s would have secured the future of the majority of its shops and workers.
A Morrisons spokesman said: ‘We put forward a proposal that would have avoided today’s announcement that McColl’s is being put into administration, kept the vast majority of jobs and stores safe, as well as fully protecting pensioners and lenders.
‘For thousands of hardworking people and pensioners, this is a very disappointing, damaging and unnecessary outcome.’
And a spokesman for the trustee of the McColl’s Pension Schemes said: ‘The trustees note that McColl’s Retail Group has appointed administrators, and are aware of reports that a number of bidders have expressed interest in acquiring the company.
‘The pension schemes are significant stakeholders in the company, and the trustees call on all potential bidders to make clear that they will respect the pension promises made to the 2,000 members by McColl’s and its subsidiaries, and will not seek to break the link between the schemes and the company.
‘The two pension schemes are relatively small compared to the McColl’s business, and funding them would clearly be manageable for the ongoing business, or for anyone who acquires it.
‘Breaking the link between the schemes and the sponsor company, by way of a pre-pack administration, would represent a serious breach of the pension promises made to staff who have served the business loyally over many years, and risks causing the schemes to enter the Pension Protection Fund with a resulting reduction in benefits.
‘The trustees are continuing to liaise closely with The Pensions Regulator, to establish how best to protect scheme members. They will continue to work with stakeholders to protect members’ interests and will keep members updated.’
