The Asda-owning billionaire Issa brothers are attempting to beat supermarket rival Morrisons to buy convenience chain McColl's, which has now entered administration, putting more than 16,000 jobs at risk.
EG Group, whose brands include Cooplands, Euro Garages and LEON, are in talks to snap up the convenience store chain, which has appointed PwC as administrators "to protect creditors, preserve the future of the business and to protect the interests of employees".
In a statement issued to the London Stock Exchange, McColl's added it was "regrettably therefore left with no choice" but to file for administration.
"Further to the announcement on 3 May 2022, the company's senior lenders have this morning declined to further extend the waiver of the company's banking covenants, which has now expired.
"Whilst the constructive discussions with the company's key wholesale supplier to find a solution with them to the company's funding issues and create a stable platform going forward had made significant progress, the lenders made clear that they were not satisfied that such discussions would reach an outcome acceptable to them."
McColl's also said PwC intends to "implement a sale of the business to a third-party purchaser as soon as possible".
The group has requested that the listing of its ordinary shares be suspended with immediate effect.
Earlier today, Morrisons tabled a last-minute rescue deal to save struggling convenience store business McColl’s.
The chain confirmed on Thursday that it was looking “increasingly likely” it could tumble into administration.
The PA news agency stated that Morrisons has now approached PwC. Its potential deal would also take on the business as a going concern, absorb its debts of over £100m and take responsibility for the company’s pension scheme.
Morrisons and McColl’s declined to comment on Friday.
The two businesses are major partners, with McColl’s operating hundreds of convenience shops under the Morrisons Daily brand.
However, McColl’s has struggled financially in recent years after witnessing soaring costs due to supply chain disruption, inflation and its large debt burden.
On Thursday evening, McColl’s said it was in talks over “potential financing solutions” to resolve its funding issues.
“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,” it added.
“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.”
Shares in McColl’s were suspended earlier this week after the company delayed the publication of its latest financial results due to its financing talks.
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.
Last year, McColl’s successfully raised £30m from shareholders to invest in the expansion of its Morrisons Daily convenience stores.
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