Edcon, banks begin capital restructure talks

Edcon Holdings, South Africa’s biggest clothing retailer by sales, named Goldman Sachs Group and Houlihan Lokey as advisers as it started talks with bank lenders and 2019 noteholders on capital restructure plans.

The talks include “new debt financings and or transactions involving our existing debt”, the company, owned by US private equity firm Bain Capital Partners, said in a statement.

“These discussions are proceeding constructively, but there can be no assurance at this time that they will be successful.”

Edcon needs to start repaying about R4,5-billion($374-million) of debt denominated in euros, dollars and rand next year, with another R20-billion due by 2019, according to data compiled by Bloomberg. Edcon, which has more than 1 500 stores across fashion chains including Edgars and Jet, has been cutting jobs to try to stem losses.

Retail sales rose 2% to R27,5-billion in the 52 weeks through March 28, the Johannesburg-based company said. That compares with a 5,1% gain a year earlier. Credit sales fell 8% and the slump “continues to delay meaningful growth of the business,” Edcon says.

Edcon’s €425-million ($464-million) of bonds due June 2019 dropped to as low as 15,2 cents on the euro from 37,7 cents at the start of the year, according to data compiled by Bloomberg. The notes traded Thursday at 25,1 cents.
By Janice Kew for Bloomberg News

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