LONDON (ShareCast) - (Sharecast News) - Shares in UK convenience store chain McColl's slumped on Friday as the company said it was increasingly likely to call in administrators as it continued to talk to lenders about a rescue deal.
Last month it issued another warning of "short-term funding issues", reduced consumer spending, and continued supply chain disruption.

McColl's, which runs a chain of 1,100 stores, also this week said it was delaying publication of its annual results as it continued negotiations on "a solution for the business". Some 16,000 jobs are at risk.

"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," the company said in a statement on Thursday after the market closed.

"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."

McColl's has reportedly been in talks with its lenders, the Morrisons supermarket group and other parties, thought to include the Issa Brothers who own Asda and the EG petrol station group.

Morrisons, which was bought out by the US private equity group Clayton, Dubilier & Rice last year, is seen as a likely saviour for several hundred outlets but is not thought to be interested in buying the entire business.

PwC, which has been advising McColl's consortium of lenders including the Silverpoint hedge fund, is understood to be lining up to handle any administration - known as a pre-pack deal, according to media reports on Thursday.

This would allow Morrisons to take on the stores it wants without McColl's smaller newsagents, trading under the Martins banner, and its pension scheme.

McColls trades under the Morrisons Daily and McColl's names for its convenience stores, Martin's newsagents and pound shops and RS McColl for stores in Scotland. It also operates post offices in one third of the estate.

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