ISLE of Man-based Shoprite, whose deep-discounting invasion of

Scotland came to a catastrophic end last year, yesterday revealed that

the disposal of its UK food retailing operations to arch-rival Kwik Save

had cost it #15m.

Shoprite, whose shares dramatically collapsed from last February's

closing high of 241p and are currently trading at only 7p, does not

expect to meet its target of redeeming #15m worth of Preference shares

by the end of this year.

However, it hopes to make up the current shortfall of about #7m

through the disposal of non-core assets on the Isle of Man and in the


And joint managing director David Webster claimed there was no danger

of Shoprite going into receivership.

Shoprite's results for the 61 weeks to January 1 reveal a loss on

November's sale to Kwik Save of 117 deep-discounting stores and sites,

about 100 of them in Scotland, of #15m.

During the period, the Isle of Man group incurred an operating loss of

#8.74m on its UK discount retailing operations, after hefty refinancing

costs were taken into account.

After exceptionals, Shoprite made a pre-tax loss of #29.2m during the

61-week period, after a profit of #5.08m in the year to end-October

1993. Not surprisingly, it is paying no dividend.

Turnover from the UK food retailing business was actually higher, at

#190m. After adjusting for the effect of the extended accounting period,

Shoprite achieved modest sales growth in the Isle of Man.

However, turnover on the island was less than one-fifth of that in the

UK at #34.9m.

Kwik Save paid about #50m for its rival's entire UK retail business

and has been busy in recent weeks converting former Shoprite stores to

its own format.

Shoprite yesterday claimed that a lack of support from its bankers had

severely weakened its negotiating position when seeking potential

purchasers and directly impacted on the ultimate selling price.

The Nicholson family, which formed Shoprite more than two decades ago,

previously worked for Kwik Save.

The late Ken Nicholson, the father of Shoprite executive chairman

Deryck Nicholson and managing director Ian Nicholson, founded Kwik Save

with Albert Gubay prior to retiring to the Isle of Man as a result of

ill-health and forming a rival group. Deryck and Ian Nicholson also

worked for Kwik Save.

Shoprite, which has eight supermarkets, one retail wine warehouse and

a Mercedes-Benz dealership on the Isle of Man, is to slash its board to

a size more in keeping with the scale of its remaining operations.

Deryck and Ian Nicholson, who between them own a majority stake in

Shoprite, will continue in their present roles.

Mr Webster is one of five executive directors who will step down after

Shoprite's annual general meeting later this month, although he will

retain a general management role. Group chief accountant Martin Poole

will replace Michael Pridham as finance director.

Commenting on the shortfall relating to the redemption of Preference

shares, Mr Webster said Shoprite was in agreement with these

shareholders and was endeavouring to dispose of certain non-core assets.

The proposed disposals of a shopping centre and business and

residential development land on the Isle of Man, as well as four

properties in the UK, should supplement the #5m cash already put aside

and the remaining #3m due from Kwik Save as it concludes the takeover of

the former Shoprite stores.

Meanwhile, Shoprite blamed its UK demise on ''very aggressive

pricing'' of value ranges by major supermarket chains such as Tesco,

Safeway and Asda.

Shoprite will certainly not be inviting UK shoppers to overfill their

trollies and underspend their budgets for a long time, if ever.

The deal with Kwik Save freezes Shoprite out of Scotland, England and

Wales for five years.