Morrisons sought to gatecrash a takeover for failed convenience store chain McColl's last night in a snub to the billionaire owners of Asda who were on the brink of securing a deal.
Morrisons, which is owned by the US private equity firm Clayton, Dubilier & Rice, has made a second offer to buy McColl’s that includes a pledge to repay its lenders in full immediately, one of the key sticking points of the supermarket’s previous bid, Sky News reported.
PwC is understood to have last night taken final offers from Morrisons and EG Group, the petrol forecourt empire owned by the billionaire Issa brothers who are also behind Asda.
McColl’s, which has a debt pile of around £170m, fell into administration Friday, putting 16,000 jobs at risk.
Morrisons had been in pole position to take control of McColl’s last week before lenders rejected a solvent offer that would have involved them rolling over more than £100m of debt into the supermarket chain, but being repaid in full as the loans expired.
However, EG Group’s proposed takeover has raised concerns over the future of McColl’s pension fund. The Issa brothers and EG Group’s co-owners, TDR Capital, have proposed to acquire McColl’s through a pre-pack administration process which would allow them to avoid paying creditors and cut ties with the company’s pension scheme. It is not known what the Issas plan to do if they are successful.
EG Group is understood to have improved its offer to cover pension funding, after being contacted by trustees of McColl's pension fund.
Rachel Croft, chairman of trustees, wrote to the Issa brothers and TDR on Sunday, encouraging them to commit to fully funding the retirement scheme. It would be a “serious breach of the pension promises made to staff ” to do otherwise, she said.
Morrisons is understood to have pledged to roll McColl's pension scheme into its main fund if its bid to gain control of the chain is successful.
The chain’s pension fund has a deficit of £16m, on a buyout basis, and risks sinking into the government’s lifeboat Pension Protection Fund if a new owner does not commit funding.
Entering the PPF could lead to a “loss of benefits” for its 2,000 members, Ms Croft warned.
She added: “We note that EG Group states on its website that it ‘strive[s] to be a good corporate citizen’, and to make a ‘positive impact’ on the societies in which it operates.
“We trust that this means that you will act in good faith towards the schemes and their 2,000 members.”
Morrisons and EG Group both declined to comment. McColl’s did not respond to a request for comment.