Convenience chain McColl’s will collapse into administration, putting hundreds of jobs in Tayside and Fife at risk.
The troubled retailer operates 25 shops across Dundee, Perth, Angus and Fife.
McColl’s held talks with its lenders on Friday morning in the hope they could extend loan agreements.
Supermarket giant Morrisons, which is a major wholesale partner, also tabled a last-ditch effort to buy the business.
Failure of talks with lenders
However, the company said “the lenders made clear that they were not satisfied that such discussions would reach an outcome acceptable to them”.
It said the company will now appoint administrators from PwC in an effort to “preserve the future of the business and to protect the interests of employees”.
The company said it hopes that the administrators will help to “implement a sale of the business to a third-party purchaser as soon as possible”.
It is understood the “third-party” is forecourt giant EG Group. Its owners, Zuber and Mohsin Issa, are part of the consortium that bought Asda 18 months ago.
Earlier on Friday, Morrisons tabled a rescue deal which would also take on the business as a going concern, absorb its debts of over £100 million and take responsibility for the company’s pension scheme.
The two businesses are major partners, with McColl’s operating hundreds of convenience shops under the Morrisons Daily brand.
Morrisons, which was bought by a US private equity firm last year, said the administration is a “disappointing” outcome.
A spokeswoman said: “We put forward a proposal that would have avoided today’s announcement that McColl’s is being put into administration, kept the vast majority of jobs and stores safe, as well as fully protecting pensioners and lenders.
“For thousands of hardworking people and pensioners, this is a very disappointing, damaging and unnecessary outcome.”
Why McColl’s is in administration
McColl’s has struggled financially in recent years after witnessing soaring costs due to supply chain disruption, inflation and its large debt burden.
In 2020, McColl’s closed a number of branches in Tayside and Fife, including Perth and Glenrothes.
On Thursday evening, McColl’s had said it was in talks over “potential financing solutions” to resolve its funding issues.
McColl’s started with one Glasgow store in 1901. It now has around five million weekly customers and a turnover of over £1 billion.
Its shares have been suspended from trading on the London Stock Exchange.
A spokesperson for the trustee of the McColl’s Pension Schemes warned staff could miss out on payments following administration. It urged any new owner to protect the schemes.
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