The total debt of the Hamashbir chain of department stores may be as high as NIS 750 million. That exceeds the value of its assets by NIS 100 million to NIS 250 million, according to an analysis of the company's financials.
The new assessment is based on the assumption that a fire sale of its assets and land would reduce their value to about half a billion shekels.
The chain's irregular debt to suppliers is about NIS 100 million, on top of NIS 150 million in regular suppliers' credit. Hamashbir also owes half a billion shekels to the banks.
The company's inventories are worth NIS more than about NIS 150 million, and customers owe it about the same again.
The value of its stores, most of which are in peripheral towns, is estimated to be NIS 250 million.
While the value of its inventories and lands will shrink if the chain is closed, it could still sell its concession for Zara, the popular Spanish fashion chain, for about NIS 100 million.
Hamashbir posts sales of about a billion shekels a year, but has been losing NIS 50 million to NIS 60 million a year. Rehabilitation of the floundering chain could only be achieved through rescheduling of its debt and reducing costs, say experts.
The chain's most fundamental errors were major investment in upgrading stores and opening new ones, which increased its debt burden to unsustainable levels.
Want to enjoy 'Zen' reading - with no ads and just the article? Subscribe todaySubscribe now