JOHANNESBURG, May 20 (Reuters) - Administrators in charge of South Africa’s Edcon believe there is a reasonable chance of saving the retailer after it filed for a form of bankruptcy protection in April.
Edcon, which owns department store chain Edgars and budget clothing retailer Jet, entered “business rescue” proceedings after losing an estimated 2 billion rand ($111 million) of sales since the coronavirus pandemic reached South Africa in March.
That hit, coupled with a decline in payments from customers who had bought on credit, meant the company was unable to pay suppliers and creditors in March and April.
In a presentation to creditors dated May 18 and seen by Reuters, the administrators said outstanding payments for services provided and goods delivered before April 29 were subject to a moratorium.
The administrators told creditors that Edcon could be saved because it had “valuable brands and market position that can possibly be preserved through business rescue”.
“The retail footprint is well established with significant interest being expressed by various parties to acquire or take over various parts of the business.”
The business rescue practitioners, Piers Marsden and Lance Schapiro of Matuson Associates, added they believed the rescue process would “achieve a better outcome for all stakeholders than a liquidation.”
They will publish a business rescue plan on June 8.
On Monday, Growthpoint Properties said Edcon’s landlords had received an offer from the business rescue practitioners to pay only “turnover rental” for the next few months, which it is evaluating. Turnover rental is rent calculated on a tenant’s retail sales.
$1 = 17.9613 rand Reporting by Nqobile Dludla; Editing by Jan Harvey and Mark Potter