Morrisons tabling last-ditch bid for McColl’s

Staff at convenience chain McColl’s must have their pensions protected after the firm changes hands, say pension trustees.

EG Group, founded by billionaire brothers, Mohsin and Zuber Issa, is expected to take over McColl’s on Monday.

However, the insolvency process may be derailed at the last minute.

Supermarket chain Morrisons has made a renewed bid for the chain, according to Sky News.

Morrisons, which already works in partnership with McColl’s, saw its initial offer to take over the chain turned down on Friday. That set in motion the insolvency process, which is due to proceed in the courts on Monday morning.

However, Sky News suggests the stage could be set for a last minute bidding war for control of the chain, following the fresh offer from Morrisons.

McColl’s and Morrisons have both declined to comment. But it could leave the owners of two of the UK’s largest grocers battling over the ailing firm.

While the question of McColl’s ownership remains open, concerns have been raised over the future of its defined benefit pension schemes.

Morrisons said its initial offer to take over McColl’s on Friday would have fully protected its pensioners.

But trustees fear the insolvency process, should it go ahead, would see pensions liabilities shed in the process.

Trustrees wrote to the Issa brothers on Saturday voicing their concerns and urging them to “do the decent thing” by honouring the chain’s pension commitments.

They have also called on business secretary Kwasi Kwarteng to intervene.

The pension schemes in question were relatively small, and maintaining them would “clearly be manageable for the ongoing business, or for anyone who acquires it”, trustees said.

Shedding the schemes, however, would represent “a serious breach of the pension promises made to staff who have served the business loyally over many years”, trustees wrote.

McColl’s employs around 16,000 staff across the chain of 1,100 convenience stores, but only around 2,000 are in the two defined benefit pension schemes that are at risk.

The convenience store sector as a whole has done relatively well during the pandemic, as people shopped closer to home.

However McColl’s has run into difficulties as it attempted to update the range of food it sold, a process made harder by Covid-related supply chain problems.

EG Group already owns thousands of petrol stations, including forecourt shops, and other convenience stores in the UK, Ireland, Europe, Australia and the US and is expected to retain McColl’s sites and staff.

However, typically after an insolvency of this kind, new owners do not take on pension liabilities.

The trustees said since EG Group claims to be a “good corporate citizen” they should consider shouldering responsibility for the schemes.

If the new owners shed the pension schemes, it will fall to the industry-funded Pension Protection Fund (PFF) to ensure members are compensated.

The PFF said if the schemes were transferred to them, members who had reached their scheme’s normal pension age would still receive the same amount in compensation as the pension they are receiving from their scheme at the time of insolvency. Members who were yet to draw their pension would receive 90% of what they could have expected.