Morrisons wins race for McColls, to preserve jobs, stores - report
By Frank Prenesti
Date: Monday 09 May 2022
(Sharecast News) - Morrisons has won a two-way battle with the Issa brothers-controlled petrol retailer EG Group for control of the McColls retail chain, Sky News reported learns.
Morrisons triumphed after a last-gasp offer to buy out its syndicate of bank lenders. The deal will reportedly see McColl's 1,100 stores and 16,000 strong workforce preserved in their entirety along with pensions obligations
It will be structured as a pre-pack administration, meaning Morrisons will buy McColl's immediately after it enters insolvency proceedings overseen by PricewaterhouseCoopers (PwC), the report added without citing sources.
On Friday, Morrisons said it believed there was no reason for the corner shop empire to be declared insolvent, but the pace of events over the weekend, with McColl's teetering on the brink of collapse, left PwC with no time to finalise a solvent transaction, Sky said, citing an unnamed insider close to the firm.
An announcement is expected to be made by PwC later on Monday.
The outcome followed a tussle over the future of one of the London stock market's most unloved companies, with its shares having slumped from a valuation of £200m to become almost worthless.
On Friday evening, EG Group appeared to have won the race for McColl's, although its stance towards the company's two pension schemes had begun to draw political scrutiny.
McColl's lenders rejected a solvent rescue offer from Morrisons on Friday that would have involved them rolling over more than £100m of debt into the supermarket chain, but being repaid in full as the loans expired.
The lenders, which include Barclays, HSBC and state-backed NatWest Group, were seeking immediate repayment of their loans, initially leading them to favour EG Group
A spokesperson for the trustees said at the weekend: "Any company looking to acquire McColl's must do the decent thing and ensure that promises made to staff about their pensions are honoured."
"We would be extremely surprised if any organisation with an interest in demonstrating good corporate citizenship were to use a pre-pack administration to cease supporting the schemes, with absolutely no engagement with the trustees."
McColl's partners with Morrisons, operating hundreds of smaller shops under the Morrisons Daily brand.
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