McColl’s Retail Group PLC (LSE:MCLS) shares sank on Monday as the supermarket chain confirmed media reports that it was considering a possible fundraising to accelerate its partnership with Wm Morrison Supermarkets PLC (LSE:MRW).
The company’s confirmation followed a report from Sky News on Sunday that the company has approached institutional investors about a share placing that could see it raise as much as £30mln, almost as much as its £40mln market cap.
The report went on to cite City sources saying McColl’s chief executive Jonathan Miller could invest a seven-figure sum in the group, with some of the proceeds expected to be used to pay down debts.
The company said no final decision had been made in regards to the size and timing of the fundraise, however, if the £30mln figure is confirmed it will require shareholder approval and potentially provoke a backlash among investors.
McColl’s said the money will be used to increase the number of stores converted into Morrisons Daily, a store format created through an alliance with Morrisons that is due to run until 2027.
However, the news was greeted badly by the market, with McColl’s shares tumbling 17.1% to 29p in late morning trading.