Unlisted retail group Edcon, which owns CNA, Edgars, Jet, is on the brink of collapse and may shed 40, 000 direct and 100, 000 indirect jobs.
The Sunday Times reported that the debt-laden retailer is seeking R2 billion in emergency funding from its owners and the state-owned Public Investment Corporation.
Edcon is South Africa’s largest non-food retailer and has been operating for 89 years.
The newspaper added that as part of its plans to prevent liquidation and job losses, Edcon is asking its landlords for a two-year 41% ‘rent holiday’ in exchange for a 5% share in the company.
In a bid to save the company, Edcon has been shutting down more brands, including Red Square and La Senza lingerie.
In 2006, Edcon was taken over by its creditors following a $1.5 billion (R21 billion) debt-to-equity swop that saw the struggling company shed a significant chunk of its debt. That meant Edcon’s owners since 2007, private equity giant Bain Capital, exited the business after paying R25 billion for the acquisition of the company, which lost market share to its competitors Truworths, Mr Price and Foschini.
The owners of Edcon Holdings are Frank Templeton Sanford C. Bernstein & Co. LLC and Harvard University Pension Fund. They took over when Edcon was struggling under foreign-currency debt that was used to finance the takeover by Bain Capital Private Equity LP in 2007.