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A major supermarket chain with 300 stores is on the brink of administration, with thousands of jobs at risk. Southern Co-op is scrambling to secure a merger deal over fears it could go bust.

The British supermarket, which operates more than 300 food stores, funeral homes and coffee shops across southern England, said three consecutive years of financial losses had pushed it to the edge of insolvency. Over 300 outlets all face potential closure unless a merger with the national Co-op Group proceeds.

Southern Co-op's chair and chief executive wrote a letter to members on April 22, warning that the proposed merger represents their best chance of survival.

Janet Paraskeva and Ben Stimson issued a statement, saying: "Southern Co-op has made losses for the past three years.

"Over the last year, trading has become more difficult, and we have relied on ongoing support from our banks and suppliers to continue operating. That support cannot now be increased within the time available."

Crunch meetings will be held on May 6 and May 21, where members will vote on the proposed merger, a decision that will ultimately decide whether the business survives.

Company chiefs warned that if members reject the proposal to join the Co-op Group, the business will "most likely" face administration, which would "put jobs at risk, lead to the loss of stores and negatively impact our suppliers".

The letter read: "We know many members are asking whether there is another option.

"We have asked the same question ourselves, repeatedly, over recent months.

"The honest answer is that there is no solvent alternative available to us now which we could deliver in the time frame and without exposing the business to a much greater risk, and it's important that we are clear about what this means.

"It is not an easy decision, but it is the one that protects more jobs, more services, and more value for members than any other option available to us today."

An external administrator would then be brought in to sell off the remaining assets.

The company expects operating losses to top £20million in the coming financial year.

Desperate attempts to slash costs - including a recruitment freeze and downsizing office space - have failed to halt the decline.

A cyber attack targeting the Co-Op Group also added to the firm's woes.