Alon Blue Square Announces Claims by Mega Retail's Trustees

Mar 09, 2016, 12:15 ET from Alon Blue Square Israel Ltd

YAKUM, Israel, March 9, 2016 /PRNewswire/ --

Alon Blue Square Israel Ltd. (NYSE: BSI) (the "Company") announced today that Mega Retail's trustees have submitted a claim with the District Court of Lod, Israel requesting the court to order the Company to pay approximately NIS 117 million alleging that the Company did not satisfy its obligation to inject funds into Mega Retail under Mega Retail's plan of recovery and arrangement from July 2015.

In other court filings, the trustees also make other allegations, including that the Company must pay NIS 301 million on account of bank loans to Mega Retail that the Company guaranteed and that the Company would have no right of recovery against Mega Retail following such payment and that the Company owes an estimated NIS 300 million in the aggregate on account of Mega Retail's employees, suppliers, credit insurers and lessors and on account of a dividend distributed by Mega Retail in 2013. The trustees also allege that the Company owes Mega Retail on account of the claim by the other shareholder in Eden Teva and other claims regarding the lease payments made by Mega Retail to Blue Square Real Estate Ltd.  The trustees further allege that the Company should have issued options to Mega Retail's suppliers under Mega Retail's plan of recovery and arrangement and that the Company conducted the business of Mega Retail with insufficient capital.

The Company strongly denies the claim and the allegations above and has its own claims against Mega Retail relating to the trustees' claim and the allegations above, which it has and will raise in court. The Company also has substantial claims against Mega Retail resulting from the Company's cash injections and guarantees to Mega Retail.  

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Alon Blue Square Israel Ltd. (hereinafter: "Alon Blue Square") operates in four reportable operating segments. In the Fueling and Commercial Sites segment, Alon Blue Square through its 63.13% subsidiary, which is listed on the Tel Aviv stock exchange ("TASE"), Dor Alon Energy in Israel (1988) Ltd. is one of the four largest fuel retail companies in Israel based on the number of petrol stations and a leader in the field of convenience stores operating a chain of 211 petrol stations and 220 convenience stores in different formats in Israel. In its supermarket segment, Alon Blue Square is a pioneer in the modern food retail.  In its "Houseware and textile" segment, Alon Blue Square, through its TASE traded 77.51% subsidiary, Na'aman Group (NV) Ltd. Operates specialist outlets in self-operation and franchises and offers a wide range of "Non-Food" products as retailer and wholesaler. In the Real Estate segment, Alon Blue Square, through its TASE traded 53.92% subsidiary Blue Square Real Estate Ltd., owns, leases and develops income producing commercial properties and projects. In addition, Alon Blue Square operates the clearance of gift certificates.

Forward-looking statements  

This press release contains forward-looking statements within the meaning of safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. Forward-looking statements may include, but are not limited to, plans or projections about our business, our future revenues, expenses and profitability. Forward-looking statements may be, but are not necessarily, identified by the use of forward-looking terminology such as "may," "anticipates," "estimates," "expects," "intends," "plans," "believes," and words and terms of similar substance. Forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause actual events, results, performance, circumstance and achievements to be materially different from any future events, results, performance, circumstance and achievements expressed or implied by such forward-looking statements. These risks, uncertainties and other factors include, but are not limited to, the following: decisions of the District Court of Lod with respect to the claims and allegations of the Mega Retail trustees; failure to reach a settlement with our bank lenders and holders of our Series C Debentures; the economic conditions in Israel on the sales in our stores and of our products and on our profitability; our ability to compete effectively large fuel companies and our other competitors; enactment of new laws and regulations, including the enactment of recommendations of governmental appointed committees and regulations with respect to the procurement of petroleum products by fuel companies and the price of petroleum products that are subject to regulation; quarterly fluctuations in our operating results that may cause volatility of our ADS and share price; fluctuations in the price of petroleum products and increases in excise tax rates imposed on the sale of petroleum products in Israel; risks associated with our dependence on a limited number of key suppliers for products that we sell in our stores; the effect of an increase in the minimum wage in Israel on our operating results; the effect of any actions taken by the Israeli Antitrust Authority on our ability to execute our business strategy and on our profitability; the effect of increases in oil, raw material and product prices in recent years; the effects of damage to our reputation or to the reputation of our store brands due to reports in the media or otherwise; government policies with respect to residential building may have a negative impact on our operations in residential building, and other risks, uncertainties and factors disclosed in our filings with the U.S. Securities and Exchange Commission (SEC), including, but not limited to, risks, uncertainties and factors identified under the heading "Risk Factors" in our annual report on Form 20-F for the year ended December 31, 2014. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this press release. Except for our ongoing obligations to disclose material information under the applicable securities laws, we undertake no obligation to update the forward-looking information contained in this press release.

Contact:
Alon Blue Square Israel Ltd.
Zehavit Shahaf, Adv.,
General Counsel and Corporate Secretary
Telephone: +972-9-9618504
Fax: +972-9-9618636
Email: zehavits@alon-oil.co.il

SOURCE Alon Blue Square Israel Ltd