The Foschini Group says it has concluded a sale agreement with Edcon for some of the stores and assets of Jet.
The Foschini Group (TFG) has reached an agreement with Edcon’s business rescue practitioners to buy some of its subsidiary Jet’s assets. The fashion retailer first announced over a month ago that it had made a R480 million offer to buy some 371 “commercially viable” Jet stores.
Edcon, which owns Edgars and Jet Stores, filed for voluntary business rescue in April after the nationwide lockdown exacerbated its already dire financial position. In June, its BRPs said the only way to save the company was through an “accelerated sale” of its divisions.
“TFG is pleased to announce that it has successfully negotiated and concluded a sale of assets agreement with Edcon and its Business Rescue Practitioners on 14 August 2020 and on principally the same terms as those set out in the conditional offer,” wrote the company in an announcement published on the Stock Exchange News Service on Monday.
TFG’s conditional offer provided for TFG to acquire the Jet brand, a minimum of 371 stores including a distribution centre located in Durban, as well as certain stores in Botswana, Lesotho, Namibia and Eswatini.
The offer also included the acquisition of at least R800 million worth of stock and property and equipment.
TFG said the sale of asset agreements in Botswana, Namibia, Lesotho and eSwatini stores has not yet been finalised, but is expected to be executed shortly. To conclude the acquisition, TFG is waiting on approval from competition authorities, amended lease terms from landlords, and confirmation from unsecured credit provider, RCS Cards, that it will continue providing credit for Jet customers.
“Based on the positive progress to date, the parties believe that the remaining conditions precedent could be fulfilled by the end of September 2020,” said the company.
Source: SA Commercial Prop News
As South Africa goes into a 21-day nation-wide lockdown, The Foschini Group – whose brands include Foschini Stores, @home, Markham, Totalsports and Sterns – has said it will stop rental payments because of the impact of the coronavirus outbreak.
This comes days after Edcon, SA’s second-biggest clothing retailer, said it may not be able to re-open after the 21-day lockdown.
The Foschini Group has 2 582 outlets across Africa which are now closed after President Cyril Ramaphosa ordered a three-week national shutdown from 27 March to combat the pandemic.
While essential services such as grocers, pharmacies, banks and gas stations are allowed to remain open, clothing retailers are not.
The Cape Town-based owner of Totalsports and American Swiss jewellery chains is also halting any planned expansion projects and will delay store refurbishments, TFG said in a letter to its landlords seen by Bloomberg and verified by the company.
“Once the situation normalises we will then be able to assess the full financial impact on the business and will engage with you further,” it said.
It is believer other retailers, big and small, are contemplating putting a stop to rental payments as business grinds to a halt.
Edcon, which had already been under financial strain, said what it’s experiencing is an indication of the challenge that many other businesses and the government will have to face after the shut down.
Although yet to recover from Edcon’s woes, retail landlords are set to face even more intense pressure as Walmart-owned Massmart announced recently the closure of 23 DionWired stores across the country.
TFG, which operates in South Africa, Australia and the UK, occupying space in major centres, went against the prevailing retail trend by producing positive trading updates in a difficult economy. The group pushed up turnover 5.9% for the nine months to 28 December 2019, compared to the corresponding period in 2018.
Coronavirus crisis in South Africa
As of Wednesday, South Africa has 1 353 cases with 5 fatalities.
Globally, coronavirus cases have reached 859 032 cases, with 42 322 deaths recorded.
South Africa is also facing additional headwinds after ratings firm Moody’s downgraded the country’s credit rating to below investment grade.
Moody’s downgraded South Africa’s long term foreign and local currency debt ratings from Baa3 to Ba1 with a negative outlook.