26 SEPTEMBER 2001
By Ray Abdilla
The former owner of a large Italian supermarket concern has expressed an interest in buying the troubled Price Club chain and might come to the rescue of the local ailing business if the Libyan company, Lafico, fails to conclude its buy-out deal before the creditors patience wears out.
Last Thursday, the Price Club Creditors Committee issued a circular saying it would suggest that the supermarket chain should be liquidated on 5 October. The Price Club giant owes some Lm8.5 million to over 200 creditors.
Although there was a sigh of relief when it appeared that Lafico would buy the supermarket giant after it ran into financial difficulties, the creditors have been getting jittery about the length of time negotiations have taken.
But last week, one company director told our sister newspaper, MaltaToday, that an Italian businessman had offered Lm1.5 million to rent the stores and also stock them. The businessman, who is the former owner of the Italian supermarket giant TAM, is due to make a formal bid for the business on Friday, the director said.
He admitted that the news was welcome, especially as the discussions with Lafico were dragging, although he stressed that the Libyan company was still very much in the running to buy the chain.
In fact, a delegation from the Libyan company was in Malta two weeks ago to finalise its discussions on investing in the chain.
The directors are hoping that a foreign company will take a fifty percent equity in the chain, which will pump some much-needed capital into the Priceclub supermarkets.
Since the beginning of Price Club's fiscal turmoil, consultants of both the company and its creditors have indicated that what the chain needs is an injection of fresh capital. However, as the capital required could not be found from Maltese investors, the company began investigating various options that were presented from beyond Malta's shores.
The chain, in its heyday, had boasted one of Malta's highest turnovers - of some Lm22 million per annum.
The chain's demise has been put down to financing, management, a sway in retailing policy and anomalies in the supply chain.
On top of this, the information technology supporting the business when the new management took over three years ago was non-existent and investment had to be made in this area as well. Hence, the financial strain of these investments had a negative result on the normal trading.