May 14, 2019 / 6:30 AM / 2 months ago

UPDATE 1-Sales slide at Spain's DIA as takeover drags on

(Adds detail, background)

MADRID, May 14 (Reuters) - Sales slid and losses continued at Spain’s DIA in the first three months of the year, the supermarket chain said on Tuesday, as investors awaited the next step in a takeover bid by Russian tycoon Mikhail Fridman’s investment fund.

Squeezed by tough competition from domestic and foreign rivals who have invested heavily in their stores, DIA has failed to stem a haemorrhage of market share it built up by discounting during a prolonged recession.

It reported a net loss of 144.4 million euros ($162.3 million) for January-March, in line with a previous estimate it gave in April, of 140-150 million euros. Like-for-like sales, a key measure of retailers’ performance, fell 4.3% from a year earlier.

Progress in the bid by Fridman’s LetterOne (L1) fund to buy the roughly 70 percent of the company it does not already own would help stabilise the situation, DIA said in a statement.

It also needs an agreement with financing banks and a capital hike. Without all three elements “the situation could deteriorate rapidly and the company could eventually be forced to file for creditor protection and/or liquidation,” it said.

Earlier this year, L1 offered to buy the rest of the company for 0.67 euros per share and try to turn it around.

Opposition from some shareholders then prompted L1 to extend a deadline for them to accept the offer until May 13. The market regulator will publish shareholder take-up in the next few days.

L1 has said it is prepared to loan its own funds to rescue DIA, whose 1.7 billion euros in debt and negative equity position have put it at risk of having to declare insolvency.

The offer had originally been conditional upon 50 percent of the other shareholders accepting its bid, but L1 scrapped this threshold last week. ($1 = 0.8898 euros) (Reporting by Isla Binnie; Editing by Paul Day and Louise Heavens)

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