Morrisons triumphed in the battle to buy bankrupt McColl’s after concluding a deal with creditors to settle debts, including a £ 10 million tax bill.
Some 16,000 jobs in 1,100 stores have been saved after a rescue takeover by Britain’s fourth-largest supermarket, which defeated the billionaire brothers behind Asda in a bidding war.
City sources said Morrisons’ final offer to McColl’s means creditors will be paid in full, as will preferential creditors such as HM Revenue & Customs. Understandably, McColl’s owes about £ 10 million in unpaid VAT.
McColl’s pension scheme, which has more than 2,000 members, welcomed the takeover after Morrisons pledged to meet its obligations to pension funds.
The company called the administrators last week after the failure of the initial negotiations with Morrisons for the acquisition of solvent capital. This plan was rejected by creditors who owed 165 million pounds, as they will have to wait until 2025 before they are paid.
Morrisons was then targeted by the EG Group, a gas station empire controlled by the billionaire brothers Isa, who also own Asda. They promised to pay off creditors in full and offer larger salaries to younger staff.
However, Morrisons returned and eventually triumphed, offering a better deal to creditors.
David Potts, CEO of Morrisons, said: “We believe this is a good result for McColl’s and all its stakeholders. This deal offers stability and continuity for McColl’s business and in particular a better outcome for its colleagues and retirees.
“We all look forward to welcoming many new colleagues in the Morrisons business and building on the proven strength of the Morrisons Daily format.”
A spokesman for the pension scheme said: “The trustees welcome the announcement that Morrisons will continue to support the schemes after the acquisition of McColl’s business. Trustees will continue to engage with all stakeholders to ensure that members’ benefits are protected after the transaction is completed.
Rob Lewis, PwC’s joint administrator overseeing the sale, said: “Especially in the current economic climate, the completion of this transaction provides much-needed security to 16,000 McColl employees after a period of understandable concern following the group’s challenges in recent months. Overall, a really positive result. ”
McColl’s board is believed to have failed to present EG Group’s takeover for approval by judges before the trial closes on Friday.
Court approval is required, as EG Group planned to acquire the company by selling “pre-packaging” – a type of bankruptcy that allows a business to be sold immediately after the appointment of administrators.
Failure to complete documents on time seems to have played a key role in reopening the door for Morrisons.
Morrisons made a counter-offer on Saturday lunch. Both sides were then given until 18:00 on Sunday to make the “best and final” bids.
It is believed that EG Group’s offer initially involved the transfer of McColl’s 2,000-member pension fund to the lifeboat of the pension protection scheme.
However, EG Group said on Monday that its final offer “offered to keep the link between McColl’s pension schemes and business”.
The change was followed by a call from pension trustees to Quasi Quartang, business secretary, and Theresa Kofi, secretary of labor and pensions, to back down amid fears that members of the scheme would be affected by pay cuts of up to 10 per cent.
An EG Group spokesman said: “Our proposal would be to protect jobs in the UK for 16,000 McColl colleagues, increase the pay of all hourly pay colleagues aged 18 and over to £ 10.05, maintain all trade at the moment and to ensure the continuous provision of invaluable public services, such as post offices.
“In addition, EG Group has proposed maintaining the link between McColl’s pension schemes and business, while respecting the historical promises made to the members of the schemes.”
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