The funding will recapitalise the struggling company and stop it from closing its doors.
Edcon, which owns Edgars, Jet and CNA, has announced that it has secured binding agreements with its existing secured lenders the Public Investment Corporation (PIC) on behalf of its client the UIF and participating landlords. This will result in the implementation of a R2.7 billion recapitalisation programme.
Without the funding, the company was facing going into a business rescue process, which had little chance of success and possibly meant the company would have to close its doors, resulting in the loss of thousands of jobs.
Edcon CEO Grant Pattison told Moneyweb in an interview that it was the most remarkable process he has ever been a part of in business.
Referring to this process, he said:
“It was complex with many diverse stakeholders, including existing lenders, unions, the Ministries of Economic Development, Labour and Finance; the PIC and UIF; participating landlords; and our management team and staff that came together to secure Edcon’s future and ultimately thousands of jobs.”
He said that the funding was roughly an equal split between the PIC/UIF, participating landlords and Edcon’s existing secured lenders.
“It’s safe to say all parties were reluctant investors,” Grant said. “This took longer than we anticipated, but they needed to do their due diligence and interrogated Edcon’s management. The banks, PIC and landlords were equally rigorous and it took time to iron out the nuts and bolts of the deal in terms of who gets what share.”
The agreement will see JSE-listed real estate investment trusts (Reits) and private property companies that lease retail space to Edcon becoming its shareholders.
Between 20 to 30 of their Edcon’s landlords have already agreed to be part of the process, but this could increase as some negotiations are still ongoing.
Hyprop, Redefine Properties, Liberty Two Degrees and Resilient Reit have all confirmed that they are supporting Edcon’s recapitalisation.
