The Mega supermarket chain is applying to the court today for protection from its creditors. The decision to turn to the court comes in the wake of assessments that the chain will not succeed in reaching a financial arrangement with its suppliers, and that the latter are liable to cease supplying goods immediately, thus in effect causing the chain's collapse.
Avigdor Kaplan, CEO of Alon Group which owns Mega and chairman of Mega itself, said in a conference call held by the company today, "We have applied to the court with a request to enable us to hold a creditors meeting to approve completion of the recovery plan. We are compelled to take this step because of the Restrictive Trade Practices Law.
"The recovery plan does not include writing off debts, but deferral of debt payments only. We propose rescheduling payments for four weeks in July-August. In addition, we seek to defer 30% of the debt for two years, during which we will repay it in full plus 2% interest.
"The company has also approached the court for the purposes of a contribution by the owners. They have undertaken to inject up to NIS 120 million to assist in day-to-day financing, and another NIS 100 million as a long-term loan. We are asking the lessors whom we pay three months rent in advance to accept monthly payments, each month in advance. We seek to reduce our real estate costs, of course through individual negotiations. We will also ask lessors, if necessary, to bring in an alternative lessee.
"I think that he plan is very balanced. Cutting 32 branches is very painful. But we think that if the other partners play their parts, we will manage to extricate Mega from its difficulties with about 150 branches around the country. It is in the suppliers' interest to save Mega and let it recover. The burden on them is substantial, but we estimate that they can bear it.
"We stress that the small suppliers who are owed a total of NIS 800, 000 will not have to reschedule debts. This is a very short process of two weeks to a month, depending on the court. This is not a stay of proceedings, but only a rescheduling of payments so that Mega can meet its payments to each of the interested parties."
Asked about the suppliers' demand that Mega's owners should inject more cash, Kaplan said, "With the permission of the Antitrust Commissioner, I held a meeting with a small group of large suppliers, and I actually heard support for the plan for July-August. We need the court's backing for a meeting of all the suppliers, and they need to vote and decide. I think that it is in their interest to maintain Mega as a going concern and to enable it to get back on a stable track."
Published by Globes [online], Israel business news - www.globes-online.com - on June 29, 2015
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