It is premature to conclude that the problems at the Steimatzky Group bookstore chain are over, but developments in recent weeks indicate a change in direction. Before, a stay of proceedings or liquidation appeared likely. Now, although these are still possible, they are far less likely.
Steimatzky is getting a new CEO this week. Iris Barel is leaving, and the controlling shareholders want all the things that were an integral part of her term to leave with her: poor results, a high salary with objectionable bonuses, and especially bad relations with the suppliers.
To a large extent, they are appointing themselves to management positions. Eyal Greenberg, the son of Yafit Greenberg, will be temporary CEO, while at the same time efforts are being made to find a permanent CEO soon. At the same time, it is clear that the new permanent CEO will not enjoy the same free hand that the Markstone Capital Partners Group, the previous Steimatzky owners, gave Barel. In addition, the group that acquired the chain appointed CPA Gideon Hirsch chairman of the board of directors and CPA Raz Shapiro as CFO.
The new management will be judged by its performance, but the mere fact that Barel is leaving is good news for the chain. The agreements with most of the creditors on most of the debt and the expected approval of the transaction by the Antitrust Authority director general are more good news.
The next milestone for Steimatzky is the Antitrust Authority director general's approval. When this is obtained, the Greenberg group intends to inject a substantial amount of capital that will probably be in the tens of millions of shekels.
The next obstacle for the chain is the petition for liquidation by Modan, Am Oved, Opus, and other publishing firms on account of the chain's debt to them; a court hearing on this matter took place today. As of now, it appears that the likelihood of the judge granting the petition is fairly small, since most of Steimatzky's creditors have consented to the proposed settlement, which involves writing off 30% of the debt and rescheduling the rest.
Steimatzky will also have to find a solution for the compensation fund for its employees, but the real test will probably come in the longer term: whether the chain can meet its large payments to suppliers at the end of the year, and of course whether it can put an end to years of losses by making a profit. Steimatzky is still far from secure, but it took another step toward safety this week.
Published by Globes [online], Israel business news - www.globes-online.com - on July 3, 2014
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