Israeli Grocer Alon Back From Brink After Creditors Deal

  • Supermarket operator's shares have fallen 87 percent this year
  • Shufersal, Rami Levy drop as competitor delays bond payments

Alon Blue Square Israel Ltd., operator of the troubled Mega supermarket chain, averted a financial collapse by securing a deal with its creditors. The company’s stock rose the most on record while its competitors slipped. 

Alon Blue reached a debt settlement with creditors to delay bond payments for five years, enabling it to sell assets to meet obligations toward its supermarkets and honor commitments to suppliers, the company said in a statement. Mega had lost market share in a price war sparked by the rise of discount operators. Alon Blue sold branches to competitors and increased its share capital in an effort to improve its ability to repay bondholders and avoid default.

“The survival of the Mega retail food chain keeps a competitor in the market and puts off a fire sale of sought-after stores,” Saar Golan, a trader at Bank of Jerusalem Ltd. in Tel Aviv, said by text. “Incumbent retail chains like Rami Levy, Shufersal, and Victory had gained on hopes of a major competitor being taken out and possibly buying Mega locations on the cheap.”

Alon Blue shares jumped 17 percent, the biggest gain since listing in November 2000, at the close in Tel Aviv. Rami Levy Chain Stores Hashikma Marketing 2006 Ltd. declined as much as 4 percent before closing 0.2 percent lower. Shufersal Ltd. slid 1.5 percent. The two chains are the nation’s biggest supermarket operators.

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