3 OCTOBER 2001
Price Club - Italian company Novacom deal to be sealed today
Positive talks yesterday led to part takeover
By Ray Abdilla
Italian Company Novacom yesterday agreed with the Price Club Directors in buying a majority stake in the supermarket chain. Sources close to both companies told The Malta Financial and Business Times that most of the leading creditors have already unofficially accepted the bid.
Creditors who are expected to meet today will decide whether to resort to the courts for a forced liquidation of the chain. However, they are expected to accept the bid of the Italian former owner of a large supermarket who has finally come to the rescue of this local ailing business.
The same sources said that the Italian company had bought around 80 per cent of the company and the Italian investment should be enough to convince the creditors.
All Price Club Supermarkets, at Burmarrad, Swatar, Naxxar, Birkirkara, Paola, Marsa and Attard should re-open for the public in November.
The Italian company has long been expressing an interest in the troubled Price Club chain after the Libyan company, Lafico, failed to conclude its buy-out deal.
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, creditors were getting jittery about the length of time negotiations were taking.
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, was due to make a formal bid for the business last Friday week.
Price Club directors had hoped that a foreign company buy a fifty percent or more, equity in the chain providing the much needed capital.
Since the beginning of Price Club's fiscal turmoil, consultants of both the company and its creditors have indicated that what the chain needed was an injection of fresh capital. However, as the capital required could not be found from Maltese investors, the company began exploring various options that were presented from foreign companies.
The chain, in its heyday, had boasted one of Malta's highest turnovers - some Lm22 million per annum.
The chain's demise has been blamed on bad financing, management, and a sway in retailing policy, which created 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 normal trading.