McColl’s has been saved from collapse following a purchase by Morrisons at the eleventh-hour.
The supermarket made the announcement on 9 May that it had purchased the company, retaining all 1,160 stores and continuing its wholesale agreement.
David Potts, Morrisons Chief Executive, said: “Although we are disappointed that the business was put into administration, we believe this is a good outcome for McColl’s and all its stakeholders. This transaction offers stability and continuity for the McColl’s business and, in particular, a better outcome for its colleagues and pensioners.
“We all look forward to welcoming many new colleagues into the Morrisons business and to building on the proven strength of the Morrisons Daily format.”
Reports by Sky News on 9 May claimed the supermarket had beaten rumoured bidder EG Group in a purchase of the struggling convenience chain, who announced it had entered administration on 6 May.
When McColl’s announced its administration, Morrisons said it had put in a bid for the chain. A spokesperson 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.”
In the announcement on 6 May, McColls said it had appointed PwC as its administrators. It said: “The company’s senior lenders have this morning declined to further extend the waiver of the company’s banking covenants, which has now expired.
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“While 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.”
It was understood the supermarket chain tabled a proposal on 4 May that would see the convenience chain’s lenders being taken on in full and its pension scheme protected, reported Sky News.
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The proposal was lodged with PricewaterhouseCoopers (PwC), the advisor to McColl’s lenders, with a response expected imminently.
The news came hours after confirmation McColl’s was “on the brink of collapse”, and new reports via Retail Week that the rollout of Morrisons Daily had been paused to try and save any extra cash.
Last month, the firm admitted to investors it was receiving “credit support” from its “key commercial partner” as it found itself “on the brink of collapse”, and only last week did it warn of temporarily suspending shares from 1 June.
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