Morrisons has tabled a last-minute rescue deal to save struggling convenience store business McColl’s.
The chain confirmed on Thursday that it is looking “increasingly likely” it could tumble into administration, putting the future of 1,100 shops and 16,000 employees at risk.
The PA news agency understands Morrisons has now approached PwC, which is advising lenders to McColl’s. This would save the vast majority of jobs and stores.
A rescue 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.
The 1,400-store group has been crippled by the pandemic, then supply chain issues, inflation and a heavy debt burden.
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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