UK retailer warns of stock wipeout amid funding talks

Bloomberg

UK convenience store operator McColl’s Retail Group Plc said it is in talks on a financing deal to save the company, but warned shareholders that they face wipeout even if a pact is reached. The stock plunged 55%.
“A potential financing solution is under active discussion with its key commercial partner and lenders which would resolve the short term funding issues,” McColl’s said in a statement. However, even if a successful outcome is achieved, “it is increasingly likely to result in little or no value being attributed to the group’s ordinary shares,” added the company, which operates more than 1,100 convenience stores and newsagents in the UK.
Sky News reported last month that grocer Wm Morrison Supermarkets Plc was evaluating options for its partnership with McColl’s.
The stock’s plunge reduced its market capitalisation to just 5.3 million pounds ($6.8 million), down from a high of about 340 million pounds five years ago. The company has been struggling amid intense price competition from supermarkets and, more recently, from supply chain snags and the UK’s cost-of-living squeeze.
McColl’s also warned that trading through the Easter period was weaker than expected amid a drop in consumer spending and cost inflation pressure. It now expects fiscal 2022 adjusted Ebitda to be no higher than the level achieved in 2021, which was 20 million pounds.
Today’s move is the second dramatic drop for the shares this year, after a 66% plunge when the retailer said an approach for the business had been withdrawn, with no further discussions with any party in relation to an offer for the business.