Yahoo Finance McColl’s warns rescue funding deal set to leave shareholders empty handed
Embattled convenience store chain McColl’s has said a potential financing deal would be likely to leave ordinary shareholders empty-handed as rescue talks continued.
Shares in the company plunged as it also reported weaker trade over the Easter period.
The retailer is still in talks with its lenders and banks in an effort secure more funding after coming under pressure from soaring inflation, supply disruption and its heavy debt burden.
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.”
It added that it expects its financial results will be delayed until its funding talks are completed.
In the update on Monday, 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 now expects earnings for the current financial year to be “no higher” than the 2021 financial year.
Shares were 52.6% lower at 1.87p on Monday morning.
