Morrisons has made a final bid to snatch McColl’s Retail Group from the clutches of its Asda-owned rivals just hours before administrators are officially appointed to oversee its sale.
Sky News may reveal that Morrisons has submitted an improved offer to McColl’s lenders, which will pay them off immediately in full, meeting their core demand.
It was unclear on what basis the latest proposal could be rejected or whether EG Group – which appears to have swung into one of the UK’s largest retailers on Friday – would try to prevent this with an additional proposal of its own.
On Sunday afternoon, there was speculation that PricewaterhouseCoopers (PwC), McColl’s creditors’ adviser, was preparing to stage a final two-way shootout between rival suitors later tonight, and both were asked to present the best and final bids.
PwC declined to comment.
McColl’s demise quickly turned into a political controversy involving his pension scheme and the fate of 16,000 workers.
McColl’s creditors rejected a proposal to bail out Morrisons’ solvent funds on Friday, which would involve transferring more than £ 100 million in debt to the supermarket chain, but to be repaid in full after the loans expire.
Sources told Sky News last week that creditors are demanding an immediate repayment, prompting them to choose a competitive offer from EG Group, the petrol retail giant, which includes immediate repayment of most of their debts but depends on placing McColl in administration.
This weekend, trustees of McColl’s pension schemes entered the dispute, with a spokesman saying: “Any company that wants to acquire McColl’s must do the right thing and ensure that staff promises to their pensions are kept.
“We will be extremely surprised if an organization that has an interest in demonstrating good corporate citizenship uses a package administration in advance to stop supporting the schemes, with absolutely no involvement with the trustees.
In a statement on the stock exchange on Friday afternoon, McColl’s said that its board was “unfortunately … [been] are left with no choice but to put the company in charge by appointing PriceWaterhouseCoopers LLP as administrators, with the expectation that they intend to sell the business to a third-party buyer as soon as possible. ”
However, although McColl’s may have been technically insolvent at the time its creditors refused to renew their refusal, PwC’s appointment still had to be sealed by the court until it closed on Friday – potentially leaving a window for additional counter-offer from Morrisons.
A source close to creditors said the next proposal would be properly considered.
Details of Morrisons’ revised offer were unclear, although the supermarket group said late last week that there was no reason to put McCall in bankruptcy.
Morrison promised to keep “most jobs and shops safe, and to fully protect retirees and creditors.”
Attention will now be focused on the decision taken by creditors, which include the taxpayer-backed NatWest Group, with Barclays and HSBC also said to be part of the borrowing mechanism.
Morrisons, which has an extensive wholesale deal to supply McColl’s, and the company’s pension schemes are among the main creditors of retailers, although they are behind the claims of the senior lending union.
Questions are also likely to be raised about the future dual role of PwC as an advisor to McColl’s creditors and as an administrator if the crisis results in lower retention and pension benefits.
It was unclear how many of McColl’s 16,000 employees would keep their jobs according to competing proposals from Morrisons and EG Group, although sources close to the situation believe some stores will eventually close in both scenarios.
McColl’s is an important partner of Morrisons, running hundreds of smaller stores under the Morrisons Daily brand.
Sky News reported in February that McColl’s was trying to secure new funding that would allay fears about its future.
The company, which is listed on the London Stock Exchange but was suspended on Friday, employs about 6,000 people on an equivalent full-time basis.
He raised £ 30 million from shareholders in a cash call just eight months ago.
If the administration is confirmed on Monday, it will be the largest insolvency in the UK retail sector in terms of labor force since the collapse of the Edinburgh Woolen Mill Group in 2020.
Since then, both Debenhams, which employs about 12,000 people, and Sir Philip Green’s Arcadia Group, which had a workforce of approximately 13,000, have also gone bankrupt, falling victim to changing retail habits and the pandemic.
Morrisons and McColl’s declined to comment.
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