The 125-year-old stationery retailer CNA has been placed in business rescue, its management team confirmed on Tuesday.
Business rescue means that a company gets breathing space from debt and other repayments, while business rescue practitioners take full management control. They then decide whether the business can be restructured to survive. Failing that, they would aim to achieve a better return for the company’s creditors and shareholders than an immediate liquidation of the company would.
Fin24 previously reported that CNA is behind on payments to suppliers and landlords. The retailer has been hard-hit by the Covid-19 pandemic, which kept customers out of the country’s big malls, and its stores.
One of its suppliers is Jonathan Ball Publishers, and its CEO, Eugene Ashton, told Fin24 that he believes going into business rescue will be a positive development for CNA.
“It will at least give them a chance to try rectify things. It was always going to be difficult taking over the business during the Covid-19 pandemic,” Ashton said.
“Business rescue is a logical consequence, and I am sure suppliers will work with them [CNA] to try [to] see if they can take themselves out of this situation. This is the right course of action and probably the best one too, for suppliers. There is no point in liquidating the business now because there are no material assets.”
Tashya Giyapersad and Simi Maharaj have been appointed as CNA’s business rescue practitioners, a director of the retailer confirmed.
CNA’s former owner Edcon was placed in business rescue in April last year, with all of its assets eventually sold off. Edcon sold CNA to an investment group, Astoria, with Exclusive Books’ former CEO Benjamin Trisk also taking a 30% stake. Astoria sold its 70% stake back to management last month.
Trisk is currently at war with the CNA board. Directors accused Trisk of contacting business rescue practitioners without their consent and then announced that he had resigned in April – which Trisk disputed.
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.
Source: Business Insider SA
The South African manufacturer and licence holder of the Wonderbra and Playtex brands has filed for provisional liquidation.
More than 700 jobs are under threat.
Netwerk24 reports that Hanes has applied for voluntary liquidation.
The Durban-based company has the licence to manufacture Playtex and Wonderbra in South Africa and other African countries.
A Hanes spokesperson told Netwerk24 that there is currently no plan to appoint an alternative distributor for the products in South Africa.
This means that South Africans may not have access to Wonderbra and Playtex products in future. The Wonderbra online store has already stopped taking orders in South Africa.
Hanes blamed the weak local economy, worsened by the pandemic, as well as the business rescue process of a “big client” for its demise. Netwerk24 believes that this can only refer to Edgars, and the Hanes spokesperson confirmed that Edcon owes it money for stock that has been supplied.
Edcon’s brands – including Edgars and Jet – were sold off last year, as part of its winding up after doing business in SA for more than 90 years. The company was forced to near-collapse under a debt burden of billions.
The Hanes factory in Durban employs more than 700 people. IOL reports that the workers received their last salary in mid-January, and that they have not been able to work since then.
By Ray White for EWN
Movie outlet Ster-Kinekor has been placed under voluntary business rescue.
In a statement on Friday evening, the company said the business rescue was aimed at facilitating the rehabilitation of the company.
It said up until February 2020, Ster-Kinekor welcomed millions of movie goers every year to their cinemas.
But due to various factors brought on by the COVID-19 pandemic, Ster-Kinekor has been trading at a loss, as the company continues to incur costs.
“As a result of the COVID-19 pandemic and the consequent economic lockdown instituted by the South African government at the end of March 2020, all cinemas were required to shut down, and only permitted to reopen under strict conditions as from the end of August 2020.
“Since then, the company has been operating under various forms of restriction, including curfews and mandatory limits to the number of guests per auditorium,” the statement read.
It also said the continued lack of content for the next four to five months meant that the business was heading for further operational and cash flow challenges.
“The board is of the view that the safe harbour that business rescue provides, in terms of providing a legal moratorium, will assist the business to return to profitability, once operating restrictions have been lifted, when international film distributions start to flow again.”
However, cinemas will remain open to the public.
Acting CEO Motheo Matsau said: ““For our customers, it is important to note that our cinemas remain open for business. All cinemas have instituted strict COVID-19 protocols, which mean temperature checks and hand sanitising on arrival and inside the auditoria and mask wearing as appropriate. Every two seats are kept vacant for social distancing.”
Edcon has announced that the sale of parts of the Edgars business in South Africa to Retailability (Pty) Ltd has been implemented, with all approvals from regulatory authorities and all conditions precedent either fulfilled or waived.
The sale includes the transfer of approximately 120 stores in South Africa together with the businesses conducted therein.
Retailability, a fashion retailer and a holding company of store brands including Legit, Beaver Canoe and Style, operates in over 460 stores across South Africa, Namibia, Botswana, Lesotho, and eSwatini.
Retailability aims to ensure that ongoing operational business is its top priority, while integration work is moving ahead vigorously.
“We are pleased that we were able to close the transaction within two (2) months after the announcement. The closure of the transaction underlines the industry fit and the excellent compatibility between Edgars and Retailability’s strategic intent, infrastructure, and value chain. We are pleased by the significant saving of approximately 5,200 jobs as well as the continued commitment to the retail industry, economy, and the sustainability of the South African Edgars brand,” said business rescue practitioners.
The finalisation of the sale in South Africa indicates the achievement of a critical milestone in the Edcon business rescue plan. The parties will continue to co-operate and work towards concluding the sale of Edgars’ businesses in other various jurisdictions in Africa (namely Botswana, eSwatini, Lesotho and Namibia), where various regulatory approvals and conditions precedent remain
By Bonga Dlulane for EWN
The South African Airways (SAA) business rescue plan (BRP) has been approved by 86% of the vote at Tuesday’s creditors’ meeting.
This paves the way for the Department of Public Enterprises (DPE) to launch a new airline with an interim board and CEO.
The department will announce a new board soon and the interim CEO of the airline is Phillip Saunders.
The approval of the plan comes after months of public spats between the department, unions and business rescue practitioners.
It’s a major win for the department as it has fought for SAA to be restructured and not liquidated.
The new airline will need approximately R16 billion to get off the ground and pay creditors.
Money will also be needed for the 1,000 staff who will be hired to be part of the airline.
With the approval of the plan, voluntary severance packages will be paid to over 2,700 employees who will now be retrenched.
By Babalo Ndenze for EWN
Some members of Parliament said that the only option left for South African Airways (SAA) was liquidation.
This comes after a vote on a restructuring plan was delayed until July after creditors and unions adjourned talks.
It also follows a decision by the Department of Public Enterprises to withdraw from the Leadership Consultative Forum working on a business model for a new and restructured SAA.
The Department of Public Enterprises said that instead of creating conditions for attracting investment and skilled South Africans, three unions had put SAA on a path towards possible liquidation.
The department said that unions had effectively aligned themselves with a competitor who stood to benefit substantially should SAA be liquidated.
However the Democratic Alliance (DA)’s Alf Lees, a member of the Standing Committee on Public Accounts (Scopa), said that liquidation was increasingly looking like the only option.
“Now it seems to me that we’ve hit the wall and liquidation is the only option,” Lees said.
He said that the business rescue process should ideally have ended in December and the rescue team should have applied to court for liquidation back then.
“They should have then done what the law required of them to do and applied to court for liquidation, so that step now remains.”
By Londiwe Buthelezi for News24
Troubled clothing retailer Edcon says the reason it sent retrenchment notices to all its staff is because it has not received any binding offers from people interested in buying the company or any of its divisions.
The retail group’s executive of corporate affairs and communications Vannie Pillay said the company sent Section 189 retrenchment notices to 22 000 workers, meaning that jobs of everyone employed by the retailer are on the line – as the owner of Edgars and Jet has approximately 17 000 people employed on full-time basis and about 5 000 seasonal workers.
“We did send notices to all our staff as per the LRA [Labour Relations Act] because we have no binding offers that have been received at this stage. So, it’s the prudent thing to start consultations in terms of Section 189,” said Pillay.
Biggest retrenchment plan yet
Edcon’s move makes it be the biggest retrenchment plan yet that any local company has announced during the lockdown, blaming it on the coronavirus-induced restrictions. For instance, the national carrier, SAA which is also in business rescue said 4 708 jobs were affected when it started retrenchment consultations in March.
Edcon said before going into voluntary business rescue in April that the lockdown caused it to lose about R2-billion in sales and did not see any other way out of its woes. But in the business rescue plan that Edcon published on the 9th of June, its business rescue practitioner (BRPs) envisaged that employees would be transferred to potential buyers of Edcon businesses. At the time, the plan said only unavoidable retrenchments would take place if there are remaining employees who were not absorbed by the buyers after the accelerated sales.
The plan said there was no conclusion to be drawn that people working in “non-viable” stores would “definitely” be retrenched. The BRPs were supposed to get final offers from businesses and parties interested in buying Edcon’s divisions by the end of June and finalise successful bids by early July 2020.
Therefore, it was expected that the extent to which the company would be able to retain jobs would become clearer then. But the business rescue plan did budget R597-million for proposed retrenchments of employees whose jobs the BRPs might not be able to save.
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.