"The coming days will be critical because if suppliers don't show confidence in the owners and Mega's management, it will be difficult to cope again with a situation of shortages and customers coming and being disappointed," a senior executive at Israeli supermarket chain Mega has told "Globes.," following the news that parent company Alon Blue Square Israel Ltd. (NYSE: BSI; TASE: BSI) is again in financial difficulties. "We are at a critical juncture and the suppliers, owners and other partners must work to save Mega."
Yesterday, Alon Blue Square's bondholders following demands raised by the banks that the parent company repay their debts to them. The bondholders claim that Alon Blue Square is close to insolvency.
The snowball effect with the bondholders threatens the Mega supermarket chain, which during the summer reached a debt settlement in which parent company Alon Blue Square committed to support the supermarket chain. The major concern now is that suppliers will decide to halt deliveries to the supermarkets, which would bring about the immediate collapse of the chain. Some suppliers have already slowed the pace of deliveries due to fears of non-payment.
Mega workers committee chairman Eyal Eli has sent a veiled threat to the bondholders and the banks, "If someone thinks that they can harm Alon Blue Square and indirectly the Mega chain's 5,000 employees and keep their hand clean on the matter is making a terrible mistake."
Last night on the NYSE, Alon Blue Square's share price fell 16.28% to $0.36, giving a market cap of $23.74 million.
Published by Globes [online], Israel business news - www.globes-online.com - on October 28, 2015
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