Rescue deal could save 25 McColl’s shops from closure in Tayside and Fife

A last-minute rescue deal for ailing convenience store retailer McColl’s could save hundreds of jobs in Tayside and Fife.

On Thursday the struggling business said it could fall into administration.

It has been in discussions with potential lenders to shore up the business for weeks. It has been hit by supply chain issues, inflation and a heavy debt burden.

McColl’s said that unless those talks are successful, it is “increasingly likely that the group would be placed into administration”.

The company currently operate more than 25 stores across Tayside and Fife, including five in Dundee.

In 2020, McColl’s closed a number of branches in Tayside and Fife, including Perth and Glenrothes.

Morrisons offer for McColl’s

According to Sky News, a saviour for the business could come in the form of supermarket giant Morrisons.

Morrisons has a proposal that would see its debt taken on and its pension scheme protected, the report said.

McColl’s is an important partner of Morrisons, operating hundreds of smaller shops under the Morrisons Daily brand.

An insider said the “vast majority” of its 1,100 stores and 16,000 jobs will be kept after a takeover.

It is thought to be structured as a solvent deal rather than pre-pack administration and little value will be attributed to shareholders.

Shares rise on deal news

However, shares in McColl’s that were trading at just 1.15p when the stock market opened today, rose by 24% to 1.4p by mid-morning.

In September 2017 the shares were worth 291p each.

Morrisons and McColl’s have not responded to requests to comment on the rescue deal.

In its most recent statement McColl’s said: “As previously disclosed on April 25 2022, the group remains in discussions regarding potential financing solutions for the business to resolve short-term funding issues and create a stable platform for the business going forward.

“Unless an alternative solution can be agreed in the short term, it is increasingly likely the group would be placed into administration.”

McColl’s started with one Glasgow store in 1901. It now has around five million weekly customers and a turnover of over £1 billion.

The Morrisons deal would represent a substantial financial commitment for its new private equity owners, Clayton Dubilier & Rice, because of McColl’s roughly £170m of debts.