Stationery retailer CNA is facing a financial crisis, with its board threatening legal action against its controversial CEO and creditors claiming they have not been paid for months.
After only a year at the helm, investment company Astoria announced last week that it sold its stake in CNA Holdings to management.
Astoria had purchased 70% of CNA from Edcon for R1.2-million from Edcon. It said it did not provide any “further equity or debt funding” to CNA.
A director of Astoria told Fin24 that they sold because they “were not able to add any value and the management team thought they could”.
The sale agreement was amicable.
However, the board of CNA is now accusing CEO Benjamin Trisk, formerly of Exclusive Books, of attempting to put the company in business rescue without consulting them, alleging that he submitted documents that show the board agreed to business rescue when they had not.
According to an article in Fin24, Trisk has refuted this claim as “complete rubbish”.
In addition, CNA director Rob Shortt and Trisk have both confirmed that CNA has fallen behind on payments to landlords and suppliers.
Creditors say they are in the dark as CNA battles to avoid business rescue, with one creditor has still not been paid for January purchases. A payment plan proposed by the retailer saw terms of 60 days effectively change to 120 days, subject to cash flow.
Last week, CNA contacted creditors to state that the proposed payment plan would be amended further with part payment now likely at the end of the month. The letter stated that the retailer needed time to put funding in place.
CNA’s stores are not as well stocked as they should be, which may point to the fact that suppliers are no longer providing stock until payments are received.
In the event that CNA does enter business rescue, it is likely that creditors will only receive 4c on the rand.