Edcon says it has buyers interested in its assets
The embattled retail group says it has had various offers for its divisions, and its survival depends on these sales
Edcon has had various offers to purchase its divisions, according to business rescue practitioners who say its survival depends on a sale, as no finance by banks has been provided.
The business rescue plan by Piers Marsden and Lance Schapiro, was completed on Monday and shared with staff and creditors.
Edcon was placed into business rescue in April despite a R2.7bn bailout by the Public Investment Corporation, landlords and creditors in December 2018.
According to the plan, “a significant number of parties expressed interest” but the press release does not name the companies currently investigating a purchase of Edgars or Jet or both brands.
“The interested parties are required to submit their final binding offers by the end of June 2020, with the acceptance of the successful binding offer set to be finalised by early July 2020.”
Employees, creditor landlords and other parties need to approve the plan by June 15 in compliance with the companies act.
Staff salaries have been paid to date and the practitioners say they are expecting to pay June salaries “subject to trading conditions and continued support being received from the TERS and unemployment insurance fund processes” referring to government support given to some companies to balance the loss of income during lockdown.
The plan states that risks to efforts to save the business include poor economic trading, uncertainty about how Covid-19 might affect sales and any unforeseen legal action.
It says if the business is not bought, it will be liquidated with no interest from funders to further invest money into it.
“If the implementation of the plan is not possible and does not take place, this would result in the immediate liquidation of the company,” the business rescue practitioners said.
Mr Price said in May that might hold a rights issue to raise capital. which led to speculation that the cash-rich Mr Price retailer wanted to buy Jet, which sells clothing at lower prices than Edgars.
But Mr Price issued a statement to deny this. “The company wishes to address this speculation and advises that the group has no intention to acquire Edcon, in part or in whole.”
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