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Creditors offered option to receive up to 67% of what they
are owed
by Ivan Brincat
The creditors of the Price Club chain of supermarkets were
presented with three options that will decide the future of
the chain at a meeting held for them yesterday evening.
Creditors were told during a presentation that Italian international
trading company Novacom would pay 50 per cent of the debts in
full and final settlement, an option that came as a surprise.
A creditor yesterday told The Malta Business Weekly that this
effectively means that creditors would receive approximately
67 per cent of what they are currently owed by Price Club.
This is mainly due to taxation on profits which totals 35 per
cent. Obviously, half of the amount owed would be written off
as bad debts by the creditor companies. Therefore, that sum
would not be taxed, with the result that creditors would in
effect receive around 67 per cent.
Sources told The Malta Business Weekly that creditors have until
Monday to make up their minds and choose what they believe to
be the best option. The same sources said that the feeling during
yesterday’s meeting was that the last option was the most
favourable.
The Italian company is expected to be given two weeks to present
evidence of the sum of money in its possession, believed to
be in the region of Lm4m. The creditors, the sources added,
would thus be paid 25 per cent of the full amount immediately
and the remaining 25 per cent would be paid in a year’s
time, backed by a bank guarantee.
The other two options which were presented to the creditors
at yesterday’s meeting were: taking the company into liquidation;
or else allowing the Italian company to rent the premises and
creditors receiving payment over a period of 10 to 12 years.
Contacted by The Malta Business Weekly, John Bonello, managing
partner of Pricewaterhouse-Coopers, the auditing firm which
is handling the issue on behalf of the chain’s main creditor
companies, declined to comment on the outcome of the meeting.
He said he had not been authoritised by the Creditors’
Committee to give any statements.
Sources said, however, that the third offer is the most acceptable
and the creditors will go for this if the majority decide to
pursue this option. The Creditors’ Committee have recommended
that creditors accept the third option.
A creditor said the third option came as a surprise. “Novacom
is ready to buy out Price Club on condition that the creditors
accept 50 per cent of what they are owed. They will also take
control of Price Club holdings – an 85 per cent stake.”
The majority of creditors seem to be in favour of the new option
and many said it was better to take 50 per cent than go for
liquidation and risk ending up with around six per cent.
However, there was consensus that the Italian company was not
known and the operators have been given two weeks to produce
evidence of the Lm4m or so they want to invest.
Creditors are now expected to vote on which option to choose
and their vote will be based on the money they are owed.
Originally, the Italian company had been ready to pay Lm1.5m
per year in rent for the chain as long as the turnover was above
Lm15m.
In its hey-day, the Maltese chain used to have a turnover of
between Lm23m and Lm25m.
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