By Londiwe Buthelezi for Fin24
The business rescue practitioners for Edcon say the only way to save the company and the livelihoods of its thousands of employees is through “accelerated sales” of the clothing retailer’s divisions to interested parties.
Edcon, which owns Edgars and Jet Stores, announced on April 29 that it would file for voluntary business rescue after the nationwide lockdown exacerbated its already dire financial position, causing the group to lose about R2 billion in sales when it was not allowed to trade.
Now the BPRs have delivered a rescue plan for the retailer, published on Edcon’s website on Tuesday morning. According to the plan – an “accelerated sales process” of divisions that can be sold and a winding down of those they may fail to sell would be in the best interests of all stakeholders. The BRPs said this proposal was a product of consultations with Edcon’s creditors, landlords, employees representatives and trade union, Saccawu.
No parties have shown interest in investing in or providing funding to Edcon, said the company.
Mr Price has rejected speculation that it has been looking to acquire retail chain Jet, a unit of struggling fashion giant, Edcon, which recently went into business rescue.
“The Group has no intention to acquire Edcon, in part or in whole,” the Durban-based retailer said in a statement on SENS last week.
However, a recent Business Day article stated that Edcon has attracted 15 entities interested in buying one or both of its two divisions.
The sale of Edcon’s businesses as a going concern would allow the company to transfer some of the employees to new owners, resulting in a significant number of jobs being saved.
“If the sale is implemented, the BPRs will seek to obtain the sale of the business or its divisions as going concerns, thereby resulting in the transfer of the relevant employees and many jobs being preserved. Employees who are retrenched, if any would be in a better position than in a liquidation,” wrote the BRPs in the business plan.
They added in a statement published by Edcon on Tuesday that creditors and landlords would also be in a better position if Edcon entities continued trading.
According to the BRPs, a significant number of parties have already expressed interest in the sales process. Initially, the BRPs received interest from 19 parties who were keen to participate in the accelerated sale process, they said. Fifteen of these complied with the requirements to proceed as preferred bidders. They are required to submit their final offers to by the end of June 2020 and finalising of successful bids will happen by early July 2020.
Divisions that aren’t sold in that process could be auctioned or sold in private treaty sales, among other means. The BRPs said Edcon employees continued to receive their salaries in April and May and they expected to make such payments again at the end of June.