Court to rule on debt deal as Mega supermarket faces bankruptcy

Bank Hapoalim balks on arrangement with nationwide chain over NIS 1.3 billion debt

A judge was set to rule Tuesday morning on a proposed debt arrangement for struggling supermarket chain Mega, after a bank balked at accepting the deal.

The chain, one of the largest in Israel with stores around the country, owes NIS 1.3 billion ($350 million) and is teetering on the edge of bankruptcy.

Bank Hapoalim is asking for a separate arrangement with the chain, apart from other debtors, which include suppliers, real estate owners and others.

Avigdor Kaplan, CEO of Alon Blue Square which controls Mega, expressed hope on Army Radio Tuesday that all debtors will approve the chain’s proposed arrangement in the Lod District court, where they were supposed to meet on Monday before Bank Hapoalim changed its mind on the debt arrangement.

Suppliers, who would ultimately sustain financial damage if the chain were to collapse, have agreed to the debt arrangement.

The sides are scheduled to meet in court again on Tuesday.

On Monday, Bank Hapoalim sent a letter to Mega and Alon in which it said that “regrettably for the bank, the debt arrangement suggested by Mega in its current form does not sufficiently answer the needs of Mega, its employees and the debtors.”

Sources in Alon told daily Israel Hayom that Bank Hapoalim “seems to have decided not to play by the rules.”

The sources added that they did not believe the bank would allow the massive store chain to collapse.

Kaplan sent the bank a letter on Monday in which he criticized the bank’s about-face on the debt arrangement.

“Alon, the controlling entity, committed to funding at NIS 240 million to support Mega and the company is also exposed to guarantees worth hundreds of millions of shekels, including credit insurance companies that ensure suppliers are paid, all with an honest and real aim of reaching an agreement. The tone of [the bank’s] letter, mentioning ‘capital holders,’ is outrageous, especially coming, as it does, from the bank’s management. Did the bank not enjoy for years the profits it made from Mega in its various incarnations?”