By Jan Cronje for Fin24
Struggling retailer Edcon, which owns owns Edgars and Jet, is set to commence with voluntary business rescue proceedings according to a letter sent by its CEO Grant Pattison to creditors and suppliers.
The letter is dated 29 April.
In the letter, Pattison writes that about R2bn in lost sales due to the nationwide lockdown caused by the coronavirus pandemic had consumed the group’s remaining cash.
The R2.7 billion in cash provided to the retailer during its last restructuring had been “substantially utilized” in funding the losses for the financial years ended March 2019 and 2020.
In a separate statement on the group’s website, Edcon states that while company stores will open on May 1 and trade in line with the “level 4” government regulations, they will have do so under business rescue.
“This decision was made in the best interest of our company and all our stakeholders. In the short time that has been available to us, we have been unable to raise the funds needed to pay the creditors for the March and April month-ends.”
“In this circumstance, South African law requires that the company either be placed in liquidation or business rescue. To provide us with a longer period to raise the money, the board has taken a decision to file for business rescue.”