Solution in sight for Price Club turmoil

Following the problems that have hit the supermarket sector lately, a solution finally appears to be in sight, at least for the Price Club chain, with the chain’s directors pumping fresh capital into the enterprise while further fresh capital from a local investor is also expected.

The chain was recently extended through the opening of two more stores, one in Attard and another in Naxxar, following the purchasing of the establishments from Happy Savers Supermarkets in deals that involved considerable sums of money.

The Price Club example appears to be similar to many other businesses and the main concerns are that the sheer number of retail outlets has eaten away at many companies’ competitive edge. Other companies facing credit problems with their respective banks have resorted to mass bartering and this have attenuated the cash flow problem facing the country at the moment.

The Price Club chain is in the process of carrying out a restructuring programme and a deal is likely to be sealed this week. The programme was realised with the help of PricewaterhouseCoopers.

Problems regarding this particular supermarket chain have been evolving over a long period and it was believed that the Price Club’s workforce of over 1,000 employees would have been adversely affected if nothing had been done.

Prime Minister Eddie Fenech Adami, Social Policy Minister Lawrence Gonzi and Finance Minister John Dalli had met with both the Price Club’s directors and its creditors to find a solution.

The government was eager to avoid crisis, as the economic slow down that has hit Malta over recent months would have only been accentuated if the Price Club were to fall into dire straits. The consequent increase in unemployment figures would have dealt another blow to the economy.

With some 600 people directly employed with Price Club and several hundred more indirectly, if the company would have gone under, the implications would be felt all around.

It is believed that the government had pleaded with creditors to grant Price Club more time.

It was also agreed that the Price Club directors would pump more money into the company. Meanwhile, the Price Club is on the brink of taking on another partner, which is ready to contribute capital and invest in the chain.

Asked why there are so many empty shelves at some of the Price Club outlets, Price Club spokesperson said that the chain is now paying everything in cash, as some creditors are no longer accepting credit.

Regarding the Lm3.5 million investment earmarked for the Save-On supermarket in Marsa, Mr Zammit said that for the time being, the project has been frozen.

Mr Zammit emphasised that the currently problems faced by the chain are the result of the recent Super Master shut down. Creditors had believed that the same fate had awaited the Price Club.