Morrisons has committed a total of £190.1m to rescue convenience chain McColl’s, administrator’s documents have revealed.
Administrator PwC said in a letter to creditors that the supermarket’s rescue package for its convenience and wholesale partner amounted to £182.1m, with a further sum of up to £8m to pay unsecured creditors.
Morrisons eventually won a shootout with EG Group (termed ‘Party A’ in the administrator’s letter) to rescue the convenience chain, taking it out of pre-pack administration on Monday 9 May.
Had administrators been officially appointed on Friday 6 May, the letter says Party A’s offer would have been accepted.
Instead, PwC’s official court appointment on 9 May gave Morrisons time to increase its bid over the weekend, with both parties submitting final offers by 6.30pm on Sunday 8 May.
Administrators said while Party A’s (EG Group’s) offer was “materially higher” than that of Morrisons, the total dividend for unsecured creditors was estimated to be up to 50% higher under the supermarket’s proposal given Morrisons’ existing creditor balance.
Administrators also said a Party B and Party C were involved in rescue talks, but neither were able to make firm offers.
A sales process initiated in February saw discussions with 10 potential financing parties and seven trade parties.
One trade party submitted a “series of written offers for parts of the store estate” for up to 108 stores, but administrators did not progress this proposal as negotiations with Morrisons continued.
The Grocer previously reported that PwC was considering a proposal from wholesaler Bestway to supply McColl’s – but it went cold on this over the weeks leading up to the administration.
McColl’s fell into administration after negotiations between Morrisons and the convenience chain’s lenders failed to reach an agreement that would have seen the lenders writing off a portion of the debt they were owed.
The eventual deal saw these lenders repaid in full.
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