McColl’s has confirmed it is seeking a capital injection in a bid to prevent the collapse of its workforce.
The symbol group retailer, which employs over 16,000 people, revealed it continues to receive credit support from its its key commercial partners as it tries to secure a long-term agreement with lending banks.
The insolvency fears come despite McColl’s reporting an 11% decease annual revenue in revenues to £1.1 billion. Net debt also increased from £89.6 million at the end of 2020 to £97 million for the year that ended 28 November 2021.
“Since the start of the new financial year, there has been a tangible improvement of product availability in stores,” McColl’s commented in a statement.
“However, the business saw a material step-down in footfall due to the surge in Covid-19 cases relating to Omicron, particularly over the Christmas period, impacting trading. While demand has since picked up, revenues in the first quarter are behind expectations.”
McColl’s also confirmed that it had received a takeover approach for the whole business, but was later withdrawn.
Sky News revealed Asda owners, EG Group‘s Mohsin and Zuber Issa and the private equity firm TDR Capital, have reportedly held discussions about making an offer for group, which operates 1,100 newsagents and convenience stores, but decided against doing so earlier this week.
Morrisons, which agreed to a £7 billion sale to the private equity firm Clayton Dubilier & Rice last year, is said to be monitoring McColl’s situation closely with a “view to possibly acquiring hundreds of its stores out of insolvency.”
However, the Big 4 grocer declined to comment.