Millions outstanding to Superquinn suppliers
If approved, Musgrave's acquisition of Superquinn will secure 2,800 retail jobs, yet the supermarket's suppliers remain concerned about outstanding payments.
Print21 July 2011
Superquinn’s former suppliers are concerned that not only will they have to confront outstanding debts of €28 million from Superquinn, but also a much tougher negotiating stance from the Musgrave Group.
Food and Drink Industry Ireland (FDII), the IBEC group that represents the food industry, is concerned that Superquinn’s creditors should be paid in full for goods already provided.
"Small, medium and large food and drink manufacturers and suppliers right across Ireland are owed up to €100 million from Superquinn,” said FDII director Paul Kelly.
“Failure to pay these companies what they are rightly due will have a disastrous effect on the supply chain and affect the immediate viability of many food companies, placing thousands of jobs at risk. Any resolution must benefit all creditors."
Of Superquinn’s debts which totalled over €400 million; €275 million is accounted for by property-related debts, €150 million by other bills and there is also approximately €50 million outstanding for suppliers.
Superquinn’s receivers, accountancy firm KPMG, said €22 million of this debt is covered by a special insurance policy held by main suppliers of meat, fruit and vegetables.
Most of the group’s smaller, local producers have been unable to secure such cover. Their only other hope to recover their losses is if they have "retained title" on their goods and can enter Superquinn stores and remove their product off the shelves.
Subsequently, the Irish Small and Medium Enterprise (ISME) association chief executive Mark Fielding said he would lodge a complaint with company law watchdog the Director of Corporate Enforcement, to investigate how Superquinn’s owners had handled their business affairs in recent months.
In one good piece of news for Superquinn’s suppliers however, the Musgrave Group has said In a press statement that it “is committed to providing existing Superquinn suppliers with the opportunity to continue to supply Superquinn stores.”
Superquinn’s outstanding property-related loans totalling €275 million, will not be transferred over to Musgrave, which has purchased the business for an unknown sum.
Industry sources are also speculating that the Superquinn head office was a significant drain on the organisation. With only 24 stores, the supermarket chain’s headquarters and staff employed there were larger than Tesco’s HQ. According to estimates, this could have been costing the chain between 3% to 4% of turnover.
There is also understood to have been six parties who were interested in purchasing the debt-saddled supermarket.
While none of the parties involved revealed the price that Musgrave has agreed to pay, Musgrave CEO Chris Martin said that the company is paying a full price for supermarket chain. The Superquinn name will also be retained.
Superquinn will remain under the management of the Joint Receivers pending regulatory approval and the completion of the transaction. The Competition Authority has yet to approve the acquisition proposed by the Musgrave Group, which it is believed could take up to 10 weeks to confirm.
Musgrave has claimed that the transaction “will secure the long term viability of the Superquinn business, protect jobs and ensure that Irish consumers can continue to enjoy the Superquinn product offer.”
The Cork-based group has added that it will use its “significant brand expertise to develop the Superquinn business by investing in the stores and bringing value to the Superquinn shopper.”
Musgrave already operates a range of successful retail brands including SuperValu, Centra and Daybreak in Ireland, Budgens and Londis in Great Britain and Dialprix in Spain.
If approved by the Competition Authority, the purchase will secure the jobs of 2,800 staff. On completion of the sale process, Musgrave has said it “intends to invest in the stores and work with the Superquinn employees to develop the future of the business.”
The Irish family group stressed that it “already has a strong commitment to Irish suppliers which helps support 14,000 jobs across 600 supplier companies and contributes €2.9 billion to the Irish economy.”
Commenting on the deal, Musgrave CEO Chris Martin said the deal when it is approved, “supports our growth agenda and will sustain our competitiveness.”
The shareholders of Superquinn’s former owners, Select Retail Holdings, including property developers David Courtney, Bernard MacNamara, Simon Cantrell, Gerry O’Reilly, Bernard Doyle, Terry Sweeney and Kieran Ryan, will recover nothing from the sale.
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