McColl’s rescue plan would be ‘bad deal for shareholders’
CONVENIENCE store chain McColl’s yesterday warned a potential rescue deal was likely to leave ordinary shareholders empty-handed.
Shares in the cash-strapped company have tumbled as the firm reported weaker trade over Easter.
McColl’s is still in talks with its lenders and banks to try to secure more funding after coming under pressure from soaring inflation, supply disruption and heavy debt.
The group, which runs more than 1,100 convenience shops, said: “A potential financing solution is under active discussion with its key commercial partner and lenders which would resolve the short-term funding issues and create a stable platform for the business going forward.
“It should be noted that even if such a successful outcome is achieved it is increasingly likely to result in little or no value being attributed to the group’s ordinary shares.”
Bosses added that the firm expects its financial results will be delayed until its funding talks are completed.
In yesterday’s update, McColl’s said it has seen “mixed” trading since last updating shareholders in February.
The group reported that a recovery in trading continued during the first half of March but it witnessed “softer trading through the Easter period, impacted by reduced consumer spending and continued supply chain disruption across the industry”. McColl’s added that it is working closely with its wholesale supplier to mitigate product availability issues.
As a result of these challenges, the company said it does not expect its annual adjusted core profit to exceed last year’s £20million.
A report last month claimed the firm’s convenience store partner, supermarket giant Morrisons, was considering options to deal with the financial struggles at the firm.
Despite its problems, the group said that its Morrisons Daily stores continue to perform strongly, with like-for-like sales growth at least 20 per cent better than stores that have not converted to the format.