Aberdeen branch likely victimAdministration looms for McLeish stores

Scores of jobs face axe as cash crisis hits deli chain

By Ian Forsyth

Published:

TROUBLED TIMES: Many of the McLeish outlets, such as this one in Union Street, Aberdeen, are expected to close immediately

A Scottish chain of New York-style delicatessens is expected to go into administration today, with the immediate loss of nearly 140 jobs.

McLeish Brothers is understood to have hit financial difficulties after its main bank, HBOS, allegedly had a change of heart over a £5.5million loan to help finance expansion.

Administration papers are due to be filed in an Edinburgh court this morning and news of the move will also be broken to staff.

Six of the nine outlets of Dundee-based McLeish are expected to shut their doors today.

They are: Union Street, Aberdeen; Castle Street, Dundee; two in Brook Street, Broughty Ferry; Kingdom Centre, Glenrothes; and South Bridge, Edinburgh.

The other three stores – Schoolhill, Aberdeen; Market Place, Inverurie; and Whitehall Street, Dundee – will remain open, at least in the short term. They are said to be the most profitable outlets and employ about 75 people between them.

The administration move will place a questionmark against McLeish’s support of two major food events in the north-east.

The firm was to be the main sponsor of the Taste of Grampian food and drink festival at the Thainstone Centre, Inverurie, on Saturday, June 6.

In addition, McLeish was a major sponsor of the Dundee Flower and Food Festival, to be held at Camperdown Country Park from Friday, September 5, to Sunday, September 7.

No one was available at McLeish to comment on the situation yesterday but a company source said a decision by HBOS to pull the loan offer was the main reason for the administration.

He added: “McLeish had big expansion plans, to grow to 25 stores and more than 600 staff in Scotland. It was then going to move south of the border.

“McLeish was putting up £5.5million to help finance this and the bank was going to match it.

“But the change of heart by HBOS left the plans impossible to achieve. It also left McLeish out on a limb as the successful future of the company hinged on this expansion. The bank said there was a problem with the availability of funds due to the growing worldwide credit crunch.”

The McLeish source added that the departure of a finance boss at the firm last year amid allegations of financial irregularities had not helped matters.

The largest shareholder at McLeish is its chairman, John von Spreckelsen, the non-executive chairman of confectioner Thorntons and a former chairman and managing director at supermarket chain Somerfield.

Mr von Spreckelsen, who could not be contacted for comment yesterday, is thought to be looking at a rescue package for parts of McLeish.

The source said other retailers have expressed interest in taking over parts of the business.

McLeish’s chief executive was north-east businessman Stanley Morrice, who has now stood down to allow the administrators to move in.

Mr Morrice was previously managing director of Aberdeen-based food retail and supply business Aberness. He took over McLeish in 2006, when it had just four stores.

A major policy at McLeish was to use Scottish suppliers and produce wherever possible.

Most of the McLeish shops have franchised areas – cafes run by Coffee Republic and confectionery counters operated by Thorntons.

Fraserburgh-born Mr Morrice could not be contacted yesterday and no comment was available from HBOS.