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.
By Londiwe Buthelezi for Fin24
The Foschini Group (TFG) says it has submitted a conditional offer to acquire Edcon’s business rescue practitioners to acquire some of the stores and assets of JET.
In the offer submitted on Friday, TFG offered Edcon R480-million to acquire a minimum of 371 commercially viable JET stores.
Edcon, which owns Edgars and Jet Stores, announced in late April that it would file for voluntary business rescue after the nationwide lockdown exacerbated its already dire financial position. In June, its BRPs said the only way to save the company and the jobs of its thousands of its employees was through an “accelerated sale” of its divisions to interested parties.
TFG, which has been growing its local manufacturing capacity, said the proposed deal also comes with JET’s distribution centre located in Durban and certain stores in Botswana, Lesotho, Namibia and Eswatini. The company is looking to also acquire JET Club and all existing JET stock of no less than R800-million.
“Edcon’s business rescue practitioners have accepted the terms of TFG’s conditional offer. TFG has been granted exclusivity to negotiate and finalise the terms and conclude the Proposed Transaction,” wrote the fashion retailer in a statement issued on Monday morning.
Analysts have long speculated that JET will probably be one division of Edcon that buyers will find interesting.
The BRPs announced last Tuesday they had signed an agreement to sell parts of Edgars to Retailability, another fashion retailer that owns the brands Legit, Beaver Canoe and Style.
TFG said JET’s brand recognition and market share and would provide it with a strategically important expansion into the “value segment” of the Southern African retail apparel market.
“The proposed transaction enables TFG to acquire selected parts of the JET business, a unique opportunity which previously was not possible and is expected to give TFG significant scale at an attractive price,” wrote TFG.
Edcon Holdings said on Thursday that it will be closing three of their chains: Boardmans, Red Square and La Senza lingerie.
This is the latest strategy to save the company after dwindling sales and profits.
By shutting down the other chains they hope to attract more customers to their flagship Edgars stores.
The decision to shut down certain chains comes from the newly appointed CEO Grant Pattison who took over the position fro Bernie Brookes. Edcon is South Africa’s largest non-food retailer.
The Johannesburg company has had a hard time staying afloat amid weak consumer spending and economic growth and in 2016, the company had to be taken over by banks and bank holders to stop it from collapsing.
Under Pattison’s plan, Edgars will cut down on more than 1 300 stores’ footprints as well as reduce floor space by 17% over the next five years to increase profitability.
They will also be focusing on Edgars mainly, which sells most of the of the items that are available in the stores that are being shut down.
Other stores that have made the cut include CNA and Jet.
Pattison said that he thinks that the company can turn. He said, “The quicker we can do this, the better”.
The urgency to make changes comes after Edcon retail sales dropped by 9,4% in three months through December 23 while adjusted earnings before tax, taxes depreciation and amortisation declining by 25%.
The owners of Edcon Holdings are Frank Templeton Sanford C. Bernstein & Co. LLC and Harvard University Pension Fund. They took over when Edcon was struggling under foreign-currency debt that was used to finance the takeover by Bain Capital Private Equity LP in 2007.
The 89-year-old company also employs 14 000 permanent a significant number in a country where more than 1 in 4 people are unemployed.
At the of last year, the company’s net debt was R4,2 billion. Some of the other attempts to revive the company include increasing the workforce, decreasing prices and bringing in international brands.
Edcon said earlier this year that they were in talks with creditors about refinancing debt to strengthen the balance sheet. Edcon also has liquidity facilities and credit facilities that will be maturing towards the end of 2018.