Administrators in charge of South Africa’s Edcon are proposing selling parts or all of the country’s oldest non-food retailer under a plan that may lead to significant job losses, after the company filed for a form of bankruptcy protection in April.
Edcon has three main businesses – the iconic 91-year old department store chain Edgars, budget clothing retailer Jet and a customer engagement division Thank U which sells insurance, offers credit and runs the sector’s biggest customer loyalty programme with over 14 million subscribers.
Fifteen parties have shown interest in buying all or parts of the businesses and they have until June 30 to submit a binding offer, according to a “business rescue” plan released early on Tuesday.
“Business rescue” of debt-laden companies is a form of bankruptcy protection in South Africa.
A decision on final sale to a third party will be taken beginning of July, the plan said.
Edcon, which opened its first Edgars store in Johannesburg in 1929, had been struggling for the last few years due to falling local demand and slow economic growth in South Africa.
The group, under CEO Grant Pattison, restructured some of its debt in 2019 to stave off bankruptcy. However, the new coronavirus outbreak forced the closure of its stores for two months, pushing the company into bankruptcy.
The administrators said the sale process may lead to significant job losses, cancellation of leases and contracts.
The group currently employs 17 292 permanent employees and about 5 000 seasonal casual workers, the administrators said.
The residual parts of the business after the sale will be put into liquidation.
The decision to sell comes after shareholders and new investors showed no interest in funding the retailer, the administrators said.
The plan is scheduled for approval by creditors, employees and landlords on June 15.