27 September - 3 October 2001

Lm4.75m offer for Price Club from Italian company

by Noel Grima

An Italian company has made what is being described as a firm offer to take over the management of the Price Club chain of supermarkets, one of the Price Club directors said yesterday.
The offer was made on Tuesday to PricewaterhouseCoopers, the auditing firm which is handling the issue on behalf of the chain’s many creditor companies. The company is Novacom Italy, described as an international trading company whose owner has experience in managing supermarkets as he was a co-owner of a chain of supermarkets. The Italian company is ready to manage the seven Price Club outlets.
It is ready to pay Lm1.5 m per year in rent for the chain, as long as the turnover is above Lm15 million.
In its hey-day, the Maltese chain used to have a turnover of between Lm23 and Lm25 million.
If the turnover is less than Lm15 million, the Italian company is ready to pay Lm1 million as rent.
It is also ready to inject Lm2.25 million to stock up the outlets and provide a rolling bank guarantee amounting to Lm1 million covering part of the rent per year. This means, the Price Club director said, that on Day 1, the Italian company will be putting Lm4.75 million into the operation.
This offer is described as being better than the one offered by Libyan company Lafico. The Italian company is ready to begin negotiations immediately and to sign the agreement by next week. In Tuesday’s meeting, a demand was made for a meeting with all creditors; this meeting is now scheduled for tomorrow.
The Italian company, through the Price Club owners, is also guaranteeing the full payment to all creditors. Had the Price Club been liquidated, said the Price Club source, creditors would have only received a minor part of the money due to them, as low as six per cent, according to some. The creditors, the source said, will now be getting far more even in the first year of operation.
The offer by Lafico is still on but the Libyan company is awaiting assurances from the government that it will be granted a licence to operate in Malta. Who will thus decide if it is the Libyans or the Italians which take over Price Club? It will be the creditors who will decide, the source said: the creditors have recently given a 3 October deadline for an agreement to be reached. If not, they will go for the liquidation of Price Club.
If the Italian offer goes through, a new management company will be set up to manage the chain. The Price Club shareholding will not be changed as a result of this offer, the source said.