Asda owners and Morrisons battle over McColl’s
Asda owners, the billionaire Issa brothers, were today attempting to acquire the McColl’s retail chain which plunged into administration under a mountain of debt.
The brothers’ EG Group looked to be behind a pre-pack administration that would top a rescue proposal from rival supermarket chain Morrisons which already has a partnership with McColl’s.
The convenience store business, which has 16,000 mainly part-time employees, fell into administration after failing to secure short-term funding from lenders to stay afloat.
In a lunchtime announcement to the stock exchange it said its “senior lenders have this morning declined to further extend the waiver of the company’s banking covenant… in the expectation that they intend to implement a sale of the business to a third-party purchaser as soon as possible”.
PriceWaterhouseCoopers was appointed to manage the administration after the cash-strapped firm warned earlier this week that it was sinking and that its shares had no value.
Morrisons proposed a deal that would involve taking on the chain’s £170m debt, its pension liabilities and preserving most of its stores and jobs.
McColl’s, which trades in Scotland under the name RS McColl, is a key partner of Morrisons, operating hundreds of smaller shops under the Morrisons Daily brand.
However, EG Group is understood to have agreed to NatWest Group’s demands for the immediate repayment of loans.
Earlier this week, McColl’s requested that its shares are suspended by the London Stock Exchange from the end of this month.
The group runs more than 1,100 convenience shops across the UK.