Edcon Holdings Ltd said lenders extended waivers to give the debt-laden South African retailer time to implement a recapitalisation plan that was approved by its board.
“The restructuring and recapitalisation of Edcon has passed its next hurdle,” chief executive officer Grant Pattison said in an emailed statement on Friday.
“This will allow sufficient time for the number of necessary due diligence and governance processes to be completed,” adding that more details will be announced in “due course.”
Pattison, who took the helm of the Johannesburg-based owner of clothing retailers Edgars and Jet and stationery shops CNA in February, announced plans earlier this year to close some chains and to cut floor space by 17% over five years to save costs.
The 89-year-old company has long struggled to stay afloat amid weak consumer spending and economic growth in South Africa, and had to be taken over by banks and bondholders in 2016 to avoid failing.
With about 21,000 permanent employees, Edcon is a significant employer in a country where more than one in four people don’t have jobs.
Edcon’s woes began shortly after Bain Capital Partners LLC took control of South Africa’s largest non-food retailer in a heavily leverage acquisition just before the global financial crisis in 2007, which led to one debt restructuring after the next; until the Boston-based private-equity firm ceded control about two years ago.
Pattison in a series of Tweets on Dec. 16 said that the company had a great day on Dec. 15, with sales up on the prior year.
He also said that the company is close to announcing a complete recapitalisation of the business “that should endure for the next few years” after the Sunday Times reported that Edcon had asked owners of malls in which it operates for a 41% reduction in rent.
As part of the plan, the firm offered a 5% stake in the business in exchange for a two-year agreement on rentals, the Johannesburg-based weekly newspaper said, citing a letter to landlords.
This would help Edcon secure R1.9 billion ($133 million) in emergency funding from banks and the Public Investment Corp, the newspaper said.
Edcon’s net third-party debt climbed 67% to R7 billion at the end of June, compared with R4.2 billion a year earlier, after the rand weakened against the euro and increased interest charges after converting some of its facilities, according to a statement on its website.