Petrol giant EG backs McColl’s expropriation when administrator is called | Business Newsletter

The billionaire brothers behind one of Britain’s largest fuel retail empires are about to seal a final rift in McColl’s Retail Group that could lead to thousands of job losses.

Sky News has learned that EG Group is finalizing its acquisition of McColl’s on Friday through a pre-packaged regulator that would usurp a rival rescue offer from supermarket chain Morrisons.

EG’s shareholders are identical to Asda’s rival, Morrisons, a food retail rival headquartered in Yorkshire.

McColl confirmed in a noon notice to the London Stock Exchange that it will appoint PricewaterhouseCoopers (PwC) as administrator, confirming a Sky News report on Thursday.

It said “senior lenders this morning refused to further extend the Company’s banking covenant waiver … in the expectation that they intend to effect the sale of the business to a third-party purchaser,” it said. three as soon as possible”.

Insiders confirmed that third party is the EG Group, although there is speculation that Morrisons – which has a deep partnership with McColl’s – could seek an injunction to prevent the deal from going through. .

McColl’s lenders, including the taxpayer-backed NatWest Corporation, are said to have demanded the immediate repayment of their loans, which EG is said to have agreed to.

Under a rival bailout proposal from Morrisons, revealed by Sky News earlier on Friday, lenders would see their loans taken over and repaid in full by the supermarket chain – but over a period of time. years.

One source said EG’s proposal would see lenders receive £90p, while another suggested they would be repaid in full.

McColl’s decision to call on administrators will have implications for members of the company’s pension scheme and could raise questions about why a solvent alternative proposed by Morrisons is not accepted.

Questions are also likely to be raised about PwC’s dual role as an adviser to McColl’s lenders and as an administrator if the crisis results in a worse outcome in terms of capacity. maintain employment and pay pensions.

It is unclear how many of McColl’s 16,000-strong workforce will continue their work under the agreement with the EG Group.

McColl’s is a key partner of Morrisons, operating hundreds of smaller stores under the Morrisons Daily brand.

Sky News reported in February that McColl’s was scrambling to secure new funding that could allay concerns about its future.

The company is listed on the London Stock Exchange and employs around 6,000 equivalent full-time employees.

It raised £30m from shareholders in a cash call just eight months ago.

In Scotland, it trades under the name RS McColl.

McColl’s demise in a management role makes it the biggest UK retail default by workforce size since the collapse of the Edinburgh Woolen Mill Group in 2020. .

Since then, both Debenhams, which employs around 12,000 people, and Sir Philip Green’s Arcadia Group, which has a workforce of around 13,000, have also gone bankrupt, becoming casualties of changing retail shopping habits. and pandemic.

McColl’s stock has collapsed this year, with existing equity now worthless.

Jonathan Miller, McColl’s recently departed chief executive, is said to have personally invested £3m in the fundraising last summer in an attempt to convince other shareholders to back the company.

A spokesperson for Morrisons said of the fallout: “We’re making a proposal that would have avoided today’s announcement that McColl would be put into administration, keeping the majority of jobs and stores safe, as well as full protection of pensioners and lenders.

“For thousands of hard workers and retirees, this is a very disappointing, damaging and unnecessary outcome.”

EG could not be reached for comment while NatWest declined to comment.

PwC has been contacted for comment.

A spokesperson for McColl’s Retirement Programs Executive Committee said: “Retirement plans are important stakeholders within the company and trustees urge all potential bidders to make it clear. that they will honor the pension promises for the 2,000 members of McColl and its subsidiaries and will not seek to break the link between the programs and the company.”

They added: “Commissioners are continuing to communicate closely with the Pensions Regulatory Authority, to establish how best to protect scheme members. They will continue to work with stakeholders. to protect the interests of members and will update information for members.”