The billionaire brothers behind one of Britain’s largest fuel retail empires are about to seal a final blow to McColl’s retail group that could result in the loss of thousands of jobs.
Sky News has learned that the EG Group on Friday put the finishing touches to a pre-pack administration takeover of McColl’s that would usurp a rival bailout proposal from Morrisons, the supermarket chain.
EG’s shareholders are identical to those of Asda, a Yorkshire-based grocery retail competitor of Morrison.
McColl’s confirmed in a midday note to the London Stock Exchange that it would appoint PricewaterhouseCoopers (PwC) as administrator, confirming a Sky News report on Thursday.
It said its “senior lenders this morning declined to further extend the waiver of the company’s banking agreement…with the expectation that they intend to implement a sale of the business to a third-party buyer as soon as possible.”
Insiders confirmed that third party was EG Group, although there has been speculation that Morrisons – which has an extensive partnership with McColl’s – could seek an injunction to prevent the deal from closing.
McColl’s lenders, which include the taxpayer-backed NatWest Group, are said to have demanded immediate repayment of their loans, to which EG is said to have agreed.
After a rival rescue proposal from Morrisons, revealed by Sky News on Friday, lenders would have taken over their loans from the supermarket chain and repaid them in full – but over a period of several years.
A source said the EC proposal would result in lenders receiving 90p in the pound, while another suggested they would be repaid in full.
McColl’s decision to retain administrators will have implications for members of the company’s pension plan and may raise questions as to why a solvent alternative proposed by Morrisons was not accepted.
Questions are also likely to be raised about PwC’s dual role as advisor to McColl’s lenders and as administrator if the crisis results in a worsened outcome in terms of job retention and pension payments.
It was unclear how many of McColl’s 16,000 employees would keep their jobs under the deal with EG Group.
McColl’s is a key partner of Morrisons and operates hundreds of smaller stores under the Morrisons Daily brand.
Sky News reported in February that McColl’s was scrambling to secure new funding that would allay concerns about his future.
Listed on the London Stock Exchange, the company employs around 6,000 people on a full-time basis.
It raised £30m from shareholders in a cash call just eight months ago.
In Scotland it operates under the name RS McColl.
McColl’s collapse into administration makes it the largest bankruptcy in the UK retail sector by headcount since the Edinburgh Woolen Mill Group collapsed in 2020.
Since then, both Debenhams, which employs around 12,000 people, and Sir Philip Green’s Arcadia Group, which employs around 13,000 people, have gone bust, falling victim to changing retail shopping habits and the pandemic.
McColl’s shares have plummeted this year, making existing equity worthless.
Jonathan Miller, McColl’s late CEO, is said to have personally invested £3million in fundraising last summer to persuade other shareholders to back the company.
A spokesman for Morrisons said of the collapse: “We have put forward a proposal that would have avoided today’s announcement that McColl’s would be placed under administration, kept the vast majority of jobs and businesses safe and fully protected pensioners and lenders.
“For thousands of hard-working people and retirees, this is a very disappointing, damaging and unnecessary outcome.”
EG could not be reached for comment, while NatWest declined to comment.
PwC was contacted for comment.
A spokesman for McColl’s Pension Schemes Trustee said: “The pension schemes are significant stakeholders in the Company and the Trustees are asking all potential bidders to make it clear that they will honor the pension promises made to the 2,000 members of McColl’s and its business affiliates and will.” do not try to break the connection between the systems and the company.”
They added: “The trustees continue to work closely with the pensions regulator to determine how best to protect members of the scheme. They will continue to work with stakeholders to protect members’ interests and keep members informed.”
Gasoline giant EG Group pounces on ailing McColl’s as administrators are called in | business news
Source link Gasoline giant EG Group pounces on ailing McColl’s as administrators are called in | business news