McColl’s in administration; EG Group, Morrisons hover

The board of McColl’s Retail Group said on Friday it has placed the company in administration with PriceWaterhouseCoopers “in the expectation that they intend to implement a sale of the business to a third-party purchaser as soon as possible.”

London newspaper The Financial Times reported that petrol station forecourt giant EG Group is attempting to buy McColl’s out of administration.

The owners of Blackburn-based EG also control Asda.

However, any deal with EG would be agreed and financed by the petrol station group rather than Asda.

It is understood that Morrisons is also still interested in a takeover of McColl’s.

McColl’s said it requested that the listing of its ordinary shares be suspended with immediate effect.

Up to 16,000 jobs are now at risk.

McColl’s has over 1,100 convenience stores and newsagents. It operates McColl’s and Morrisons Daily branded convenience stores as well as newsagents branded Martin’s across the UK, except in Scotland where it operates under its heritage brand, RS McColl.

Morrisons claimed its rescue proposal for McColl’s would have secured the future of the majority of its shops and workers.

A Morrisons spokeswoman 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.”

McColl’s said in a stock exchange statement: “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.

“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 LLP as administrators, in the expectation that they intend to implement a sale of the business to a third-party purchaser as soon as possible.”

A spokesperson for the trustee of the McColl’s Pension Schemes warned that staff could miss out on payments following administration and urged any new owner to protect the schemes.

The trustee said: “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 …

“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.”

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Mark McSherry
Dalriada Media LLC sites are edited by veteran news journalist Mark McSherry, a former staff editor and reporter with Reuters, Bloomberg and major newspapers including the South China Morning Post, London's Sunday Times and The Scotsman. McSherry's journalism has also appeared in The Washington Post, The Guardian, The Independent, The New York Times, London's Evening Standard and Forbes. McSherry is also a professor of journalism and communication arts in universities and colleges in New York City. Scottish-born McSherry has an MBA from the University of Edinburgh and a Certificate in Global Affairs from New York University.