Coles in an interesting deal

I just found an interesting tidbit of information on Coles Group Limited (ASX:CGJ).

Apparently Coles Group Limited (ASX:CGJ) has assisted major beef supplier Australian Country Choice (ACC) quite substantially over the last few years. It has helped the group buy agricultural properties in Queensland worth millions of dollars. ACC has spent $A21m on purchasing properties over the past decade, and an arrangement between Lee and Coles requires that the retailer reimburse ACC the cost of mortgage or interest repayments for property purchases relating to the servicing of Coles supermarkets.

Coles has no ownership rights over the properties despite the arrangement, and the retailer has not included amortisation costs associated with the property purchases in its annual accounts. The Coles board approved the arrangement in the mid-1990s.

Sounds like a good deal for ACC but a very poor deal for Coles Group. I can't believe the board approved this sort of arrangement. This shows Coles management is not as good as it should be and those responsible should have a query placed on them over the deal. In the end it is the shareholders who are losing out.

Good Luck Investing.