Struggling stationery group CNA has removed Benjamin Trisk as a director from its operations after a meeting on Monday, according to a statement from the company’s former CEO.
The management team at CNA allegedly tabled a resolution to remove Trisk as director of CNA operations, which Trisk has labelled as “preposterous” and “spurious”.
Trisk claims he will go to court.
JSE-listed investment group Astoria previously sold its 70% interest to the rest of the management team, including CNA operations director Rob Shortt, CFO Nazir Patel and director of procurement Olinka Nell.
Astoria purchased CNA from Edcon in February last year for R1 and subsequently contributed further capital to pay for transaction costs.
Trisk, who holds the remaining 30% of CNA, said he and his legal team believed the share purchase from Astoria by the rest of the management team was “unlawful” and carried consequences for any funding the group was trying to negotiate.
The group, whose landlords and suppliers have experienced delays in payments from the stationer, has openly said it is facing major financial problems. It also says its problems were worsened by the shadow cast by the legal battle between Trisk and his former employer, Exclusive Books, which became public knowledge six weeks ago.
After CNA received negative feedback about this from funders and creditors, members of its management team held a meeting with Trisk on April 19, where they say he offered to resign. CNA has told him it has accepted his resignation from that date. Trisk has denied these claims.
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.
According to an article published in the Sunday Times at the weekend, former Exclusive Books CEO Benjamin Trisk is willing to re-engineer Edcon’s flailing CNA brand.
This follows his recent departure from the book retailer after a breakdown with the company’s shareholders. Hired in 2013, he spent the past five years in charge of a turn-around strategy after the store had experienced a series of failures.
Trisk told Business Times this week that he would only consider joining CNA if approached. “I would probably look at it very seriously. However, I must make it clear that I have not been approached.”
“But I’m not leaping into anything. I’ve had one approach from overseas which I can’t talk about at the moment. Locally I’ve also had approaches, but I think it’s quite early in the cycle,” he said.
CNA: Edcon’s white elephant
CNA has long been in the doldrums. In 1997, Wooltru bought CNA out of CNA-Gallo for R447-million.
A turnaround plan was implemented but failed dismally and in 2001, the company was sold to Gordon Kay & Associates for R192-million. By the following year, CNA was in liquidation.
Edcon, under the leadership of US retailer Steve Ross, snapped up CNA for R141-million, but 16 years later the retail brand continues to make losses.
CNA is part of Edcon’s speciality division, that once housed Legit, Edgars Shoe Gallery and the group’s non-profitable brands.
According to The Sunday Times, Chris Gilmour, an investment analyst, said: “They tried hard, but couldn’t win. They [Edcon] are thinking about getting out anyway, they can’t keep on putting more money into it. [CNA] is a pile of unadulterated rubbish that should have died 20 years ago.”
Gilmour said South Africa didn’t have a high-street retail culture anymore, making it difficult for brands such as CNA to have a market “and as a result the model is completely shot”.
Meanwhile, Alec Abraham, a senior equity analyst at Sasfin Wealth, told The Sunday Times: “I don’t know what they [CNA] are and I don’t know if they know what they are.”
He said there was a likelihood that CNA would end up in a similar situation to that of Musica, where “they can’t find a buyer because no one wants to buy this unfit business and they are running with the idea as long as they are not losing money on it. And if they are going to be the last man standing, then so be it.”
An Edcon spokesperson has confirmed that CNA is not for sale.
According to Edcon’s latest financial results, for the 13 weeks to December 23 last year, CNA has 196 stores, including 11 Samsung stores, positioning its offering in electronics, stationery, gaming and the limited book retail offering.
Original article by Palesa Vuyolwethu Tshandu for The Sunday Times