The McColl’s convenience group has confirmed that it is considering undertaking a capital raise to accelerate the pace of roll-out of its Morrisons Daily store conversion programme and strengthen its balance sheet.
A report by Sky News over the weekend said it had learnt that McColl’s had approached institutional investors regarding a potential share placing to raise extra funds of around £30m.
In a statement issued today in response to the news report, the company said it was currently “exploring options” relating to a potential capital raise. However, it stressed that no final decisions had been made on whether to proceed or with regards to the timing or size of any such raise.
As well as increasing the number of its Morrisons Daily store conversions, a chunk of the proceeds are expected to be used to pay down some of its debt.
McColl’s, which trades from about 1,200 convenience stores and newsagents across the UK, has had a wholesale supply deal with Morrisons since 2018, covering brands and the Safeway own label.
Back in March, McColl’s revealed that it planned to roll out the Morrisons Daily format to 300 of its stores over the next three years with the support of its supermarket partner. This followed the strong performance of an initial 31 former McColl’s outlets now operating under the Morrisons fascia that have benefitted from “a higher mix of grocery sales, breadth of offer and value proposition”.
McColl’s stated at the time that the move represented a “significant milestone” in its strategy to become a food-led convenience retailer, giving it even greater access to Morrisons grocery expertise and brand.
McColl’s recently told investors that the partnership was unaffected by the potential takeover of Morrisons, highlighting that its wholesale contract was extended in February by a further three years to January 2027.
NAM Implications:
- If the stock market responds well, crazy not to proceed.
- Paying down debt a priority…
- …but a pity not to invest more in development.
