Morrisons has proposed a last-ditch rescue deal to save McColl’s from calling in the administrators, as Asda owners the Issa brothers also show an interest in saving the struggling convenience store group.
The deal proposed by the supermarket giant would allow McColl’s to avoid collapsing into insolvency, while also preserving the majority of its 1,100 store portfolio. The deal would also mean that most of the 16,000 employees would not lose their jobs.
Sky News has reported that Morrisons made its move in the hours immediately following yesterday’s announcement that McColl’s was “increasingly likely” to have to call in the administrators unless a “financing solution” could be found.
The proposal – which was tabled with PricewaterhouseCoopers (PwC), the adviser to McColl’s lenders – would see Morrisons taking on all of the retail group’s £170m debt and protect its pension scheme. A response is expected later today.
McColl’s currently works closely with Morrisons – which is owned by private equity firm Clayton Dubilier & Rice – operating hundreds of smaller Morrisons Daily convenience stores on behalf of the Big 4 grocer.
Insiders told Sky News that the rescue package would be structured as a solvent deal rather than pre-pack administration.
Sky News has also reported that EG Group, the petrol retailing giant owned by TDR Capital and the billionaire Issa brothers Mohsin and Zuber, has expressed interest in a deal.
Without a rescue deal, McColl’s – one of Britain’s biggest convenience store chains – is likely to collapse within days, putting 16,000 jobs at risk; 6,000 of which are full-time.
Even if a deal goes through, it is unlikely to result in any value being attributed to the group’s London-listed shares, which have collapsed this year. The entire company is now worth less than £3.5m.
PwC is expected to take on the role of administrator in the event that company’s collapse into insolvency cannot be averted.