The shares of Alon Blue Square earlier this month took their dead cat bounce in anticipation of today’s request by its Mega supermarket chain for court today for protection from its creditors. As Investopedia describes it, said bounce is “a temporary recovery from a prolonged decline or bear market, followed by the continuation of the downtrend.” Or, to look at the numbers, the then-long declining shares gained 27% between May 1 and May 13 — bounce — and have dropped about the same since — dead cat.
Mega’s move wants to block suppliers from cut off deliveries and, in effect, sinking the supermarket chain. The company is not seeking cancellation of debts, just postponing repayment. It all has a bit of a Greek feel to it.
Israel’s #2 grocer owes NIS 1.36 billion, including NIS 705 million ($184 million) to suppliers and service providers and NIS 585 million to the banks and other credit providers. Its largest suppliers, including Osem, have cut off deliveries. Mega has almost 200 branches across Israel, employing nearly 6,000 people. Some 32 branches will be closed as part of a previously announced recovery plan, which includes sacking 1,000 workers.