SMITHS News has said it expects its bad debt risk from the administration of McColl's to be between £3.4 million to £4.5m.
The calculation is a reduction on the earlier estimate of £5.6m, which it “took steps to mitigate".
The Swindon-based newspaper and magazine wholesaler saw its shares drop 14 per cent when the administration was announced earlier this month.
Supermarket giant Morrisons won a takeover battle for the collapsed convenience store chain and acquired the business in a pre-pack administration arrangement.
When McColl's revealed on May 6 that it had entered administration it posed a potential bad debt risk of between £6m and £7m.
READ MORE: Morrisons acquires McColl's in pre-pack agreement
Smiths, which was serving 600 McColl's stores, told the City that unsecured creditors can expect to receive “estimated distribution prospects of between 20% and 40%”.
Smiths said: “Immediately following McColl's administration, the company took steps to mitigate McColl's bad debt risk and has reduced the debt to £5.6m, a claim of which is being filed with the administrator.
"In light of the administrator's latest guidance, the company expects the overall bad debt risk to further reduce and to be in the region of £3.4m to £4.5m, which will impact statutory profit after tax for the full year."
The company continues to supply McColl's under its new ownership on improved payment terms, which "provides partial mitigation to the impact on cash flow".
Smiths also said: “The board confirms its intention to maintain payment of the planned interim dividend of 1.4p per share, as announced as part of the company's interim financial results on May 4, 2022."
It said "underlying trading continues to be in line with expectations and, given the company's on-going cash generation and strong net debt reduction, the board continues to expect to be in a position to recommend a final dividend for FY2022 up to the full distribution permissible under the company's current banking facilities - £10m per financial year - for payment in February 2023".
The McColl's takeover reached a bidding battle when Morrisons and forecourt giant EG Group both tabled offers. EG - whose owners the billionaire Issa brothers also run Asda - was said to have initially been favourite to complete the deal.
Morrisons' early approaches had reportedly been rejected by lenders who preferred EG's offer to instantly repay more than £160m in debts from McColl's.
However, it was reported at the time Morrisons' deal was also also understood to have made provisions to repay lenders.
Shares in Smiths closed down 0.29%, or, 0.1p, at 34.4p.
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