Morrisons sweetens last-ditch McColl’s bid following EG Group swoop

McColl’s administrators were considering revised bids from both Morrisons and EG Group on Sunday night, as both bidders improved their initial offers in a scramble to wrest control of the convenience store chain from the other.

McColl’s, which fell into administration on Friday, can now only be rescued through a pre-pack deal, with prospective bidders given a deadline of 6pm on Sunday evening to submit final and revised bids.

It is understood that Morrisons pledged to repay McColl’s £165m loans to its lenders in cash, rather than move the debt to its balance sheet as initially planned. 

Morrisons’ original proposal to snap up McColl’s involved buying the business before it fell into administration and transferring its pension liabilities to the supermarket.

This offer was rejected by the convenience chain’s banks, which preferred EG Group’s bid, which involved instant repayment of McColl’s outstanding loans.

Following Morrisons’ revised bid, it is understood EG Group submitted a counter-offer, which saw the group pledge to take responsibility for McColl’s pension scheme.

EG Group’s initial proposal would have left McColl’s pension scheme in the hands of the Pension Protection Fund, which drew criticism from McColl’s trustees.

Morrisons, which has had a wholesale contract with McColl’s since 2017, told investors that it has exposure of up to £130m if the convenience chain collapses.

If a deal with EG Group is favoured over Morrisons, the supermarket would also experience significant short-term disruption as its wholesale agreement would immediately be terminated.

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