Edcon loses the battle; gets taken over
Struggling South African clothes retailer Edcon has been taken over by banks and bondholders, including Standard Bank, Barclays Africa Group and FirstRand. Furthermore, creditors in Edcon have agreed to substitute R21 billion in debt for equity control of the retailer. The retailer has been struggling with an over-leveraged capital structure for years. Having been taken private in a R25-billion buyout by Bain almost a decade ago, Edcon has been unable to to grow at a fast enough rate to pay down debt.
According to Bernie Brookes (pictured), Edcon CEO, the situation came to a head in March this year, when a choice had to be made between seeking protection from creditors - something called business rescue - or not paying debt holders.
The company's new owners are Standard Bank, Barclays Africa Group, FirstRand, Standard Chartered, Investec, Franklin Templeton, and Harvard Pension Fund.