More than 40 000 jobs are at risk at troubled retailer Edcon after the company’s board decided to file for business rescue.
The company said that it has lost R2bn in sales since the outbreak of COVID-19. The company’s employees will now have to rely on the Unemployment Insurance Fund COVID-19 benefits to get their April salaries.
Edcon CEO Grant Pattison said the form didn’t have sufficient funds needed to pay the creditors for the March and April month-end.
“We will be working closely with the appointed Business Rescue Practitioners, shareholders and government to find a way to plug the financial hole. It is my hope that some version of the business will emerge to continue to serve customers,” Pattison said.
“Edcon’s stores will open on the 1st May, but we will have to do so under “Business Rescue”. This decision was made in the best interest of our company and all our stakeholders. In the short time that has been available to us, we have been unable to raise the funds needed to pay the creditors for the March and April month-ends.”
The retailer employs 40 000 workers, with another 100 000 workers employed by factories supplying it. The company is also the largest tenant at most shopping centres
The company has appointed Piers Marsden and Lance Shapiro as business rescue practitioners.
Edcon, who owns brands such as Edgars and Jet, was a successful retailer until US-based private equity firm Bain Capital got its hands on it in 2007, delisting Edcon from the JSE in a debt-financed R25 billion buyout.
Bain gave ownership of Edcon to creditors in 2016 in a debt-for-equity swap that reduced Edcon’s debt burden to R6 billion from R26.7 billion.