Pepkor raises R2.2bn in oversubscribed bond auction
The owner of Pep, Ackermans and Incredible Connection will use the money to pay medium-term debt to improve its liquidity
Pepkor Holdings, owner of Pep, Ackermans and Incredible Connection, has raised R2.2bn in a bond auction as it seeks to diversify its sources of funding and reduce borrowing costs.
The money will be used to pay medium-term debt due in 2022, which will improve the company’s liquidity and debt profile.
The auction, held on Friday, raised R765m in five-year-bonds and R1.43bn from three-year-bonds. The company said the auction was over subscribed by 2.8 times.
Pepkor CEO Leon Lourens said: “It is very pleasing to see such strong support from the local investor community for Pepkor. The confidence expressed in Pepkor is underpinned by the excellent performance our retail brands continue to deliver.”
The group’s net debt sits at just more than R6bn, down from R14.1bn in March 2020.
Last year, it sold men’s fashion retailer John Craig to the owner of footwear stores Studio 88, as the formal menswear seller had been underperforming and did not fit well with Pepkor’s discount clothing brands.
It also sold its hardware stores under the Building Company brand to Cashbuild for R1.1bn, though the sale is awaiting competition authority approval.
Pepkor’s most recent trading update in the half-year to end-March showed 8.8% growth at Pep and Ackermans as consumers continue to search for bargains and buy cheaper clothing, which makes up two-thirds of its revenue. It said HiFi Corporation and Incredible Connection saw high growth as people continued to buy computers and printers for working and schooling at home.
As the R350 special relief Covid-19 grants end, it may begin to see a downturn in sales as consumers continue to be hard hit by SA’s weak economy.
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