Edcon Holdings Ltd. secured R2.7 billion ($191 million) from lenders, landlords and the Public Investment Corp. as South Africa’s largest clothing retailer wraps up its latest restructuring plan.
The deal will free the Johannesburg-based owner of the Edgars, Jet and CNA chains of all interest-bearing debt and will see its backers become new shareholders, Edcon said in an emailed statement on Friday. The funding from landlords will come in the form of rent reductions, the retailer added.
The news comes three years after Bain Capital Private Equity LP handed the company to creditors after a 2007 buyout turned sour. Edcon continued to struggle under a debt burden that was a legacy of that deal, and Chief Executive Officer Grant Pattison has been working on a turnaround and restructuring for much of his year in charge.
At stake were the livelihoods of about 30,000 employees, a supply chain that includes 750 companies and floor space that accounts for one tenth of the occupancy in South Africa’s biggest shopping malls. More than one in four people in the country are unemployed.
Pattison’s attention will now turn fully to restoring the fortunes of Edgars, the flagship brand, low-cost clothing specialist Jet and stationery chain CNA. Edcon has been closing shops and reducing floor space, and “numerous other strategic initiatives are underway,” the CEO said in the statement.
“There was encouraging progress over the festive and back-to-school trading periods,” he said. “Reassuringly, our credit sales growth has exceeded our cash sales growth for the past several months, and the number of active accounts has increased for the first time since 2012.”
The restructuring brings on board the PIC, Africa’s largest money manager with about R2 trillion in assets. The Pretoria-based company, which administers government-worker pension funds, is the subject of an ongoing inquiry into how it makes investment decisions after a series of scandals last year.
Redefine Properties Ltd. contributed R54.6 million of equity agreed to rental reductions of as much as R13.8 million, the Johannesburg-based real estate firm said in a separate statement.