Struggling British convenience store chain McColl's said on Friday it would have to go into administration after failing to resolve funding issues with its lenders.
The 1,100-store McColl's runs convenience stores under its own brand and Morrisons Daily, as well as Martin's newsagents. It employs about 16,000 people, including around 6,000 full-time workers.
McColl's board said it was left with no choice other than to place the company in administration, a form of protection from creditors, appointing PriceWaterhouseCoopers (PWC) as administrators.
The retailer expects PWC to undertake a sale of the business to a third party as soon as possible.
Rescue Deal
Sky News reported earlier on Friday that supermarket group Morrisons, which has a wholesale supply tie-up with McColl's, had proposed a rescue deal that would see the vast majority of its stores and workforce preserved. McColl's lenders would be taken on in full and its pension scheme protected.
However, it later reported that EG Group, the petrol station and food retail business owned by brothers Zuber and Mohsin Issa and private equity group TDR Capital, was expected to agree a deal that would rescue the bulk of the company.
Morrisons declined to comment, while EG Group could not immediately be reached for comment.
McColl's has requested the London listing of its ordinary shares be suspended with immediate effect.
Shareholders had already seen the value of their investment virtually wiped out over the last year.
McColl's has just under £170 million of debt.
Talks With Lenders
The company, which has suffered from supply chain issues and poor trading, had been in talks with lenders for weeks to resolve funding issues.
It had warned on Thursday that unless new financing was secured, administration was 'increasingly likely'.
It said on Friday that constructive talks with Morrisons to find a solution to the company's funding issues had made progress, "the lenders made clear that they were not satisfied that such discussions would reach an outcome acceptable to them."
Morrisons, which trails market leader Tesco, Sainsbury's and Asda, has been owned since last October by US private equity group Clayton, Dubilier & Rice (CD&R).
The Issa brothers and TDR also own Asda.
McColl's will file documents to the court on Friday to appoint PWC as administrators.
News by Reuters, edited by ESM – your source for the latest retail news. Click subscribe to sign up to ESM: European Supermarket Magazine.
