One of South Africa’s largest retail groups, Edcon, is on the bring of collapse.
According to a report by the Sunday Times, the closure of Edcon would put 140,000 jobs at risk and deal a massive psychological blow to the South African economy.
In a letter seen by the paper, Edcon is said to have asked its landlords for a two-year 41% ‘rent holiday’ in exchange for a 5% share in the business.
The letter states that unless this offer is accepted, Edcon is likely to enter liquidation risking 40,000 direct and 100,000 indirect jobs.
This would make it ‘by far the biggest single job loss ever’ in South Africa, said economist Mike Schussler.
The Sunday Times reports that the group us also seeking R2 billion in emergency funding from its owners and the state-owned Public Investment Corporation (PIC).
Trading analyst Lester Davids said that landlords would likely find it difficult to fill the space currently occupied by Edcon stores around the country.
But Edcon going under would be even worse, he said.
“The closure of Edcon would have a ripple effect as a large number of employees would be out of work, meaning these employees’ bonds, cars and store card repayments may not be paid.”
Edcon manages brands like Edgars, CNA and Jet.