Marinopoulos to get new lease on life

The collapse of the Marinopoulos Group appears to have been averted after a last-minute rescue deal by rival supermarket chain Sklavenitis was given the green light by the board of Alpha Bank on Wednesday following a similar decision from Eurobank to extend credit lines and save the floundering chain.

The Marinopoulos chain was established in 1962 and is the largest retail chain in Greece. Until four years ago, French multinational Carrefour claimed the title of Greece’s largest supermarket chain through a 50/50 joint venture with Marinopoulos. The French giant’s share was bought out by the Marinopoulos Group, amid much fanfare, in 2012.

Marinopoulos had a total of 823 stores at the end of March 2016.

Earlier this year, it filed for bankruptcy, having run up debts of 1.3 billion euros, an unprecedented amount for a Greek company. Of that, 723 million was owed to suppliers and creditors, 4.3 million to employees and 338 million to lenders, while 159 million was in unpaid rent and 100 million in unpaid taxes and social security contributions.

Marinopoulos had sought a three-month protection order two months ago as a first step toward avoiding its collapse. The group pointed the finger at Greece’s ongoing economic troubles for its waning fortunes, as well as internal devaluation. Revenues had been dropping over recent years, while operating expenses had increased.

Sklavenitis stepped in early on as a key player in saving the chain, and on Wednesday confirmed it would buy out Marinopoulos using up to 360 million euros of bank financing.

Reports say the proposed restructuring plan includes a 50 percent haircut on the amounts Marinopoulos owes its suppliers.

All that appears to be left now is for National and Piraeus banks to OK the deal. At this stage, it is thought that little can derail the negotiations since the issue has already passed through the relevant committees at the two banks. Going forward, Sklavenitis will act as strategic investor for the Marinopoulos Group.

The deal will be welcomed with much relief since the size of Marinopoulos’s turnover represents around 1 percent of Greece’s GDP. Its collapse therefore had serious implications for the country’s economy as a whole. It will also be good news for the group’s approximately 2,000 Greek suppliers, some of whom face bankruptcy themselves as a knock-on effect of the supermarket’s collapse, and the 12,500 employees who would be added to Greece’s already inflated unemployment figures.

As part of the agreement, the legal framework outlines that, among other conditions, banks owed money by the group have to agree to the transfer of all of Marinopoulos into a new company, which will be 100 percent controlled by Sklavenitis.