local news

Price Club future bright - Zammit
foreign company to take 50% equity stake in chain

In a wide-ranging and candid interview, Price Club director Victor Zammit this week expressed his belief that, despite the highly publicised financial difficulties encountered by the supermarket chain over recent months, the chain nevertheless has a bright future.

In fact, a Libyan delegation has been in Malta this weekend to finalise its discussions on investing in the chain. Mr Zammit explained to our sister paper, The Malta Financial and Business Times, "This [recent negotiations] should allow the foreign company to take a fifty percent equity in the chain with our participation in the other half.

"This capital should make Priceclub supermarkets stronger than ever and I believe that the future of the chain should be brighter."

The anticipated investment from Libyan investors is expected to amount to some Lm2.5 million, while Mr Zammit expects the chain to reopen its doors to business by November, or last least in time for Christmas shopping.

Mr Zammit explained that since the beginnings of Price Club's fiscal turmoil, consultants for both the company and its creditors have indicated that what the chain needs is an injection of fresh capital. However, as the required capital was not to be found from Maltese investors, the company began investigating various options that were presented from beyond Malta's shores.

According to Mr Zammit, "I have been having long discussions with one of these companies for about three months and, in principle, an agreement of participation has been reached. All due diligence procedures have also been carried out and should be ratified in the coming days."

Speaking about his role in the chain’s downfall, Mr Zammit explains that he regrets not being further involved in the daily running of the company, explaining that while he was on the board of directors, his capacity at the mammoth chain was as a non-executive director. The chain, in its heyday, had boasted one of Malta's highest turnovers - of some Lm22 million per annum.

On the supermarket giant's fall from grace, he explains that the main factors in the chain's demise were mainly related to financing, management and anomalies in the supply chain that exist only in Malta.

Mr Zammit also cites a sway in retailing policy as another contributing factor. He explains, "The new management which took over the chain in 1998 tried to change the objective of the business from one based only on discounts to one of ‘better service'. This plan, which required substantial capital to materialise – such as changing the product mix and the actual layouts of the stores - could not be finalised due to the inability to raise the necessary financing from local institutions.

"Moreover, the information technology supporting the business when the new management took over three years ago was nonexistent and investment had to be made in this area as well. Hence, the financial strain of these investments had a negative result on the normal trading."