ON THE MONEY
STUART THEOBALD: Culture shift puts companies in ICU
EDCON adds its name to the list of major companies that banks have had to rescue over the past year. First it was Lonmin, whose crushing debt forced the company to almost entirely recapitalise. Then it was PPC. And now Edcon. The retailer’s lenders have been forced to convert R20bn of their debt into equity to allow the company to get back on its feet.What is remarkable about these rescues is that they happened at all. Not too long ago, I suspect they would have all ended up in the hands of liquidators, where the companies would have been dismembered, assets flogged and staff put out of work while creditors were paid a fraction of the money they were owed. Instead, banks have taken a proactive approach, rolled up their sleeves and hammered out solutions that allow companies to continue operating. Of course, such an approach can provide them with the best shot at recovering their exposures.But there is also something more going on: new thinking in financial circles over just how a co...
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