PIC backs Edcon rescue plan
The PIC, which has R1.2bn invested in Edcon, says the rescue plan approved on Monday by creditors has the best chance of saving jobs
The Public Investment (PIC) said on Tuesday it supported a proposed rescue plan for ailing retail group Edcon, in which it invested R1.2bn.
The proposed plan seeks to support job and creditor sustainability and a higher recovery dividend for the Unemployment Insurance Fund (UIF), compared to a liquidation process, the PIC said in a statement.
“Although it is probable that jobs will be lost, support of the business rescue plan aims to minimise job losses, maintain footprint of Edcon’s retail entities to ensure support for landlords and continue to sustain components of the value chain consisting Edcon trading partners,” the PIC said.
Edcon’s creditors approved the company’s business rescue plan after a meeting on Monday, with the practitioners having successfully warded off some creditors who tried to stop the process through the courts.
The plan was backed by more than 75% of creditors and has been formally approved.
The approval of the business rescue plan, which proposes an accelerated sale process, allows practitioners Piers Marsden and Lance Schapiro to sell the parts of the business that are of interest to bidders. Binding offers must be submitted by June 30.
They will then close any stores or brands that are not sold by the end of August. Almost R600m has been set aside for staff retrenchments, though the practitioners hope to save a “significant” number of almost 17,300 employees’ jobs.
Unsecured creditors, including landlords and hundreds of clothing suppliers owed more than R3.1bn, are set to receive 4c for every R1 owed. Secured creditors, owed about R3.7bn, will earn 19c, according to the plan.
The PIC, through its R1.2bn investment via the UIF, is entitled to ordinary shares in Edcon, a subscription in an indirectly secured guaranteed mandatorily convertible instrument, and in an indirectly secured guaranteed instrument.
Edcon, one of SA’s retail titans of the past century, was pushed into the business rescue process, a form of bankruptcy protection that hands over the running of a company to an administrator who seeks to rehabilitate it. It lost R2bn in sales after the government imposed a lockdown of the economy to curtail the spread of Covid-19.