Wigan shop staff relief as Morrisons comes to the rescue of stricken McColl's

Scores of them across the borough had feared for the worst when last week it was announced that convenience store brand McColl’s announced it was going into administration.

In the end though Morrisons beat EG Group in a takeover battle for the collapsed retailer.

EG – whose owners also run supermarket giant Asda – had initially been favourites to complete a rescue deal for McColl’s.

Morrisons’ early approaches had reportedly been rejected by lenders who preferred EG’s offer to instantly repay more than £160m in debts from McColl’s.

However, it is understood that Morrisons’ successful move will also repay the lenders in cash.

In a statement after the deal was announced, it said that “the secured lenders and preferential creditors will be paid in full with a distribution also expected to unsecured creditors”.

Morrisons had also originally proposed to only save the “vast majority” of job and stores, but improved this offer during the bidding process.

“All McColl’s colleagues will be transferred with the McColl’s business to Morrisons,” the supermarket said on Monday.

And Wigan employees in the borough’s 11 McColl’s stores were today breathing a sigh of relief.

One, who asked not to be identified, said: “It really looked like the writing was on the wall late last week.

"I was fearing for my job, my livelihood and even my home.”

Another added: “This cost of living crisis has hit a lot of people hard and the thought of losing my job in the middle of this was terrifying. I’m so glad the chain has been rescued.”

Morrisons chief executive David Potts 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.”

A spokesperson for the McColl’s Pension Schemes said: “The trustees welcome the announcement that Morrisons will continue to support the schemes following its acquisition of the McColl’s business.

“The trustees will continue to engage with all stakeholders to ensure that members’ benefits are protected following the completion of the transaction.”

McColl’s filed a notice to appoint administrators from PwC on Friday and formally entered administration on Monday.

Morrisons is currently McColl’s wholesale supply partner and was expected to immediately terminate its deal with the convenience chain if the takeover move proved unsuccessful

McColl’s also runs around 270 stores under the Morrisons Daily brand.

It is understood that administrators were favourable to deal with Morrisons because the Bradford-based supermarket was one of McColl’s biggest creditors.

The deal comes less than a year after Morrisons itself was bought for £7bn by US private equity company Clayton, Dubilier & Rice (CD&R).

McColl’s collapse has come after a financial struggle over the past two years as it witnessed soaring costs due to supply chain disruption, inflation and its large debt burden.

Retail trade union Usdaw welcomed the rescue and is now seeking assurances for the future for staff along with trade union recognition to give them a voice in the business.

Usdaw national officer Joanne McGuinness said: “It is great news that Morrisons has been successful in their bid to buy McColl’s out of administration and it will be a huge relief for the staff. We are now seeking urgent discussions with Morrisons to help secure the future for the staff.

“McColl’s was a non-unionised business, which meant their staff had no real voice in the future of the business. Usdaw has a long-standing and productive relationship with Morrisons and we will be looking to extend trade union representation to all staff in McColl’s.”

Simon Underwood, business recovery partner at accountancy firm Menzies LLP, said: “Morrisons already has a wholesale supply agreement with McColl’s, so this may have aided negotiations with the administrators and helped to speed up decision-making on both sides.

“The speed of this deal will come as a great relief to employees, lenders and all creditors with a vested interest in the convenience store chain.”