There are fresh hopes that convenience chain McColl’s – which has a store in Brean – can be rescued when it enters administration.
PwC are set to become administrators for the company and the BBC reports a sale to the billionaire Issa brothers’ EG Group could come soon after.
In a letter from McColl’s to its employees across the UK, the firm says it hopes all staff would transfer to the new owner.
McColl’s currently employs 16,000 people across its 1,100 stores which includes a store in South Road, Brean.
The Issa brothers also co-own supermarket chain Asda, while EG Group owns thousands of petrol stations and convenience shops in the UK, Ireland, Europe, Australia and the US.
Accountancy firm PwC are expected to be appointed as administrators when the courts reopen on Monday, according to national media reports. Any sale could only be completed once administrators have been formally appointed.
In a statement, McColl’s says PwC intended to look for a buyer “as soon as possible”.
It comes after supermarket chain Morrisons proposed a rescue deal on Thursday to try to safeguard the chain. However, this was rejected by lenders.
McColl’s said that while discussions with Morrisons had “made significant progress”, its lenders had made clear they would not reach a conclusion that was acceptable to them.
“In order to protect creditors, preserve the future of the business and to protect the interests of employees, the board was regrettably therefore left with no choice other than to place the company in administration,” McColl’s said. Morrisons described this as “a very disappointing, damaging and unnecessary outcome”.
“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,” the company said in a statement.
Morrisons and McColl’s signed a deal five years ago which involved Morrisons being the convenience store chain’s sole supplier for grocery products, including the relaunched Safeway brand.
McColl’s raised £30m from shareholders last year to invest in expanding its Morrisons Daily convenience stores.
The company had been moving towards making more of its shops into Morrisons Daily stores, but had not moved quickly enough to take advantage in the boom in local shopping during the pandemic.
With £170m of debt to service, the business had been running out of cash. Morrisons had been talking to McColl’s and its creditors for a number of weeks as it aimed to thrash out a rescue.
After being knocked back, Morrisons made an improved offer on Thursday evening which was thought to include taking on McColl’s pension commitments and its £170m debt.
The Post Office, which has branches in 600 McColl’s stores, also said it was monitoring the situation closely and had undertaken contingency planning “to minimise the impact on customers should any branches be affected.”