McColl’s in talks with lenders as it attracts interest for parts of business
McColl’s has issued a response to press speculation over the weekend in which Sky News reported that the convenience retailer is racing to raise new funding to avoid collapse.
In a statement this morning, McColl’s said it remains in ongoing discussions with its lending banks, as previously announced on 29 November, as it looks towards a longer-term agreement on its banking facility.
It stated: “The group has received the necessary agreement to roll forward its financial covenant test periodically, and continues to receive credit support from its key commercial partner to enable these discussions. The group continues to believe that a financing solution will be found that involves its existing partners and stakeholders. A further update will be made as and when these discussions conclude.”
In September 2021, McColl’s completed a placing and open offer in which it raised proceeds of £30 million, two thirds of which are being used to accelerate the rollout of its Morrisons Daily store rollout, which is on track. The balance was to be used to enhance the retailer’s working capital headroom, but McColl’s said this has now been absorbed by its second half trading shortfall which was driven by issues with product availability.
Giving an update on recent trading, the retailer said group like-for-like sales increased by 5.9% in the 11 weeks to 13 February 2022 compared to the same period pre-pandemic two years ago. While there has been a tangible improvement in product availability, McColl’s was hit by a decline footfall in the period due to the emergence of the Omicron variant, particularly over the Christmas period. Although demand has since picked up, the retailer said revenues in the first quarter are behind expectations.
As a result, McColl’s now expects full year adjusted EBITDA to come in slightly behind current market expectations.
The retailer has also revealed that it recently received a takeover approach from a potential buyer, although this was subsequently withdrawn, as well as indications of interest for parts of the business. McColl’s said: “The board will consider all options with the aim of maximising value for all stakeholders.”
