Convenience store chain McColl’s has seen shares plunge after it confirmed talks to secure cash needed to stop it collapsing into administration.

The company, which employs around 16,000 people, is working with advisers to find a buyer or a third party willing to inject fresh funding.

The retailer has a number of stores across Dorset including branches in Poole’s Dolphin Shopping Centre, Wimborne, Swanage and Ferndown.

It revealed that it recently received a full takeover approach from an unnamed suitor but that this has since been withdrawn.

Shares dropped by almost 60% to a record low of 2.82p on Monday as McColl’s also warned that its earnings are set to miss targets for the year.

The update came after Sky News reported that the group has “a matter of weeks to secure funding”.

McColl’s told investors it “continues to believe that a financing solution will be found that involves its existing partners and stakeholders”.

The firm raised £30 million from a share placing in September designed to help secure its short-term future.

It said two-thirds of this was used to accelerate the expansion of its Morrisons Daily convenience stores in partnership with the retail giant.

It added that remaining funds were to be used to bolster its “working capital headroom” but that a shortfall in trade driven by supply challenges has cut into this.

The retailer also revealed that it has seen a “tangible improvement” in product availability in recent months but said shopper footfall was affected by the spread of the Omicron variant of Covid-19 over the festive period.

Revenues have picked up recently but for they remain below expectations for the quarter to the end of February, it said.

The company’s board said it therefore expects adjusted earnings for the current financial year to be “slightly behind current market expectations”, with a net debt of around £100 million.