The Mega supermarket chain will petition the court today for protection from its creditors and for a creditors meeting, "Globes" has learned. Lawyers for Mega's owners, Alon Group, are considering the petition that will be filed.
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.
Last Wednesday, the management of Alon Group held a meeting with the suppliers. The suppliers say that Alon Group CEO Avigdor Kaplan requested that for the next two months payments to them should be deferred by two weeks, and that payment of 30% of the supermarket chain's debt to them should be spread over five years. Kaplan said that besides the NIS 220 million that the shareholders have undertaken to inject into Mega, he was prepared to provide further collateral. The suppliers, however, asked Kaplan to provide a work plan, and demanded that the owners should put their hands in their pockets and inject more than NIS 220 million.
Suppliers with whom "Globes" spoke said they were not inclined to agree to a rescheduling of debt, because so far Mega had not presented any convincing plan that would extricate it from the mire into which it was sinking. The same suppliers also estimate that in any case Mega will not transfer the payments due to them this week.
One supplier told "Globes", "The situation at Mega is far worse than the way it is described. The biggest problem at Mega is not the financial one but the non-existent consumer loyalty to the chain. The branches are empty, and day-to-day the situation continues to deteriorate. The hole keeps getting deeper. At present there is no plan. There is a plan with commitment on the financial side, but nothing that will make the chain start growing again. Even the sale of the AM:PM stores will not solve Mega's problems."
Published by Globes [online], Israel business news - www.globes-online.com - on June 29, 2015
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