Hopes raised as McColl’s Brean store saved in bailout bid for 1,100 stores
There are fresh hopes that the McColl’s convenience store chain – which has a store in Brean – could be saved when it goes into administration.
PwC is set to become a director of the company and the BBC reports that a sale to billionaire Issa brothers to EG Group could come soon after.
In a letter from McColl’s to its employees across the UK, the company says it hopes all staff will transfer to the new owner.
McColl’s currently employs 16,000 people in its 1,100 stores, including a store in South Road, Brean.
The Issa brothers are also co-owners of the Asda supermarket chain, while EG Group owns thousands of petrol stations and convenience stores in the UK, Ireland, Europe, Australia and the United States.
Accounting firm PwC is expected to be appointed as administrator when the courts reopen on Monday, according to national media. Any sale could only be concluded once the administrators were officially appointed.
In a press release, McColl’s indicates that PwC intended to seek a buyer “as soon as possible”.
It comes after supermarket chain Morrisons offered a bailout deal on Thursday to try to protect the chain. However, this was rejected by lenders.
McColl’s said that while talks with Morrisons had “made meaningful progress”, its lenders had made it clear they would not reach a conclusion acceptable to them.
“In order to protect creditors, safeguard the future of the company and protect the interests of employees, the board of directors unfortunately had no choice but to place the company in administration,” said McColl’s. Morrisons described this as “a very disappointing, damaging and unnecessary outcome”.
“We have put forward a proposal that would have averted today’s announcement of McColl’s conservatorship, secured the vast majority of jobs and stores, while fully protecting pensioners and lenders.” the company said in a statement.
Morrisons and McColl’s signed a deal five years ago that meant Morrisons would be the convenience chain’s sole supplier for groceries, including the relaunched Safeway brand.
McColl’s raised £30million from shareholders last year to invest in the expansion of its Morrisons Daily convenience stores.
The company had been pushing to turn more of its stores into Morrisons Daily stores, but hadn’t moved quickly enough to take advantage of the boom in local shopping during the pandemic.
With £170m of debt to repay, the business was cash-strapped. Morrisons had been talking to McColl’s and its creditors for several weeks as it aimed to arrange a bailout.
After being pushed back, Morrisons made an improved offer on Thursday night that would include taking on McColl’s pension commitments and his £170m debt.
The Post Office, which has branches in 600 McColl’s stores, also said it was monitoring the situation closely and had undertaken contingency planning “to minimize the impact on customers if any branches were affected.”