Struggling retail giant EDCON, which owns Edgars, Boardmans, CNA and Jet, has informed its creditors and suppliers that it will commence voluntary business rescue proceedings as a result of the company’s dire financial position.
Edcon’s already precarious financial situations worsen when the coronavirus lockdown was implemented.
In a letter, CEO Grant Pattison indicates that the company lost about R2-billion in sales due to the lockdown. Edcon indicates that the opening of stores and trade from the first of May will take place under business rescue.
Pattison has indicated in a voice note that Edcon anticipates a significant shortage of cash by the end of this month. He says they were unable to pay creditors and suppliers before the start of the nationwide lockdown.
“For your own planning, it would be prudent of you to consider that orders already placed with you may be cancelled. I encourage you to work with buyers and planners. In this respect, we will be dependent on your assessment of our ability to pay for both arrears and future purchases and orders and services. In the midst of our own stress and fears, we acknowledge the impact that our financial position will have on you and your businesses and the devastating effects that our decisions will have on your operations. We can only sympathize with you.”
Pattison says they have used up the remaining cash due to the coronavirus pandemic.
Thousands of jobs at the retailer could be lost if the company goes into liquidation or if it goes ahead with retrenchment options through business rescue.
Restructuring and recapitalisation plan
In December 2018, the EDCON board approved a restructuring and recapitalisation plan that was meant to ease the groups’ financial strains.
The retailer was also seeking R2 billion in emergency funding from the Public Investment Corporation.
In the video below, CEO Grant Pattison explained how Edcon lenders also extended payback periods based on the plan: