Supermarket acquires convenience chain from administrators, keeping 16,000 staff, 1,100 stores and pension schemes
All McColl’s 16,000 staff jobs and its 1,100+ stores nationwide, have been saved by a quick sale of the group’s business and assets to Morrisons – including preserving the pension schemes.
Creditors however will be hit as the beleaguered convenience store chain went into administration on Friday, 6 May, with PwC’s Toby Banfield, Rachael Wilkinson and Rob Lewis appointed as joint administrators, and the acquisition by Morrisons was announced late on Monday, 9 May.
Morrisons, which had an exposure of about £130million to McColl’s mostly in stock, won the battle against petrol station operator EG Group, which is owned by Asda co-owners the Issa brothers, to gain control of the convenience chain.
McColl’s lenders had rejected a solvent rescue offer from Morrisons on Friday that would have involved them rolling over more than £100m of debt into the supermarket chain, but being repaid in full as the loans expired.
Set up in Glasgow in 1901, McColl’s group has its head office in Brentwood and is now made up of McColl’s Retail Group, Martin McColl Limited, Clark Retail Limited, Dillons Stores Limited, Smile Stores Limited, Charnwait Management Limited and Martin Retail Group, and its estate of managed stores and newsagents all sell a wide range of greeting cards among the foodstuffs and essential items.
On appointment, the joint administrators completed the sale to Alliance Property Holdings Limited, part of the Morrisons Group, the group’s largest supplier, with which it has a partnership for a Morrisons Daily store rollout planned to hit 450 conversions in total, with 270 already in operation.
David Potts, Morrisons chief executive, said: “Although we are disappointed that the business was put into administration, we believe this is a good outcome for McColl’s and all its stakeholders. This transaction offers stability and continuity for the McColl’s business and, in particular, a better outcome for its colleagues and pensioners.
“We all look forward to welcoming many new colleagues into the Morrisons business and to building on the proven strength of the Morrisons Daily format.”
McColl’s had faced financial pressure over recent years resulting from Covid19-related disruption and, most recently, supply chain challenges, creating issues in product availability. With 16,000 staff, roughly 6,000 on a full-time equivalent basis, the sheer size of the operation – which covers McColl’s, Martin’s newsagents, and RS McColl’s in Scotland – makes the group a large card retailer.
The group had faced financial pressure over recent years resulting from Covid-19 related disruption and, most recently, supply chain challenges, creating issues in product availability.
While the Morrisons Daily stores were doing well, according to McColl’s statements last week, mixed trading had impacted the group with a recovery in trading performance during the first half of March, but there was softer trading through the Easter period, with reduced consumer spending and continued supply chain disruption across the industry.
PwC’s Rob said: “Especially during the current economic climate, the completion of this transaction provides much-needed certainty to McColl’s 16,000 staff after a period of understandable concern following the group’s challenges over the past months.
“As well as saving thousands of jobs, this deal secures a platform for the trustees of the group’s pension schemes to enter into arrangements which will protect the pensions entitlements of so many people. All-in-all a really positive outcome.”
No mention was made however as to greeting card publishers and other suppliers who had bills outstanding when McColl’s went into administration although, under the pre-pack administration deal agreed, all secured lenders and preferential creditors will be paid in full with a distribution also expected to unsecured creditors.
“Morrisons Wholesale Supply Agreement will continue in place after the transaction minimising disruption to customers and employees as all stores will continue to trade. We wish Morrisons well with integrating McColl’s into their business,” added Rob.
Rachael added: “Having successfully secured this deal our role will now prioritise continuity of data and key systems alongside liaising with landlords and other key creditors.
“The transaction also includes an obligation on Alliance Property Holdings to rescue the company’s pension schemes, with Wm Morrison Supermarkets Limited acting as guarantor going forward.”
Top: McColl’s is now part of Morrisons group