Owner of South Africa’s Edgars Files for Bankruptcy Protection
Owner of South Africa’s Edgars Files for Bankruptcy Protection
Edcon Holdings Ltd., South Africa’s second-largest clothing retailer, filed for administration after losing 2 billion rand ($108 million) in sales and failing to pay suppliers as a result of the country’s strict lockdown to contain the coronavirus.
Shops selling anything other than food or medicine were ordered to close almost five weeks ago, with the easing of some restrictions due to kick in from Friday. The owner of the Edgars and Jet chains has exhausted cash supplies and while stores will open on May 1, the company will operate under a local form of bankruptcy protection, Edcon said in a statement on Wednesday.
“We will be working closely with the appointed business rescue practitioners, shareholders and government to find a way to plug the financial hole,” Chief Executive Officer Grant Pattison said in the statement. “It is my hope that some version of the business will emerge to continue to serve customers.”
Edcon warned last month it may not be able to outlast the lockdown, even after securing 2.7 billion rand from lenders, landlords and the Public Investment Corp. in a 2019 restructuring plan that freed the retailer of all interest-bearing debt. The company has about 18,000 staff and its suppliers employ many more.
Edcon isn’t alone as similar crises play out around the world due to the coronavirus. Earlier this month, struggling U.K. clothing retailer Debenhams Plc sought to be taken over by administrators, a move to avoid being pushed into liquidation after closing stores. Retailers globally have asked landlords for leniency during a period where they will generate little or no revenue.
Edcon’s most recent restructuring came two years after Bain Capital Private Equity LP handed the company to creditors following an ill-fated buyout ten years earlier. Pattison, formerly of WalMart Inc-owned Massmart Holdings Ltd., was appointed to work on a turnaround and in Wednesday’s statement said Edcon had been on track with its business plan through December.
The business rescue proceedings will be handled by administrators Piers Marsden and Lance Schapiro.
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