West Pack Lifestyle says a private buyer has purchased its businesses and assets, safeguarding more than 1,100 jobs across its corporate and franchise stores.
After publishing its business rescue plan, which included a corporate finance process aimed at selling the business or finding alternative funding to keep it afloat, 35 potential buyers were approached with 18 expressing interest, said Fluxmans Attorneys director Craig Blumenthal.
Blumenthal said the final offer was accepted and approved in October after rigorous negotiations. He said the winning bid came from a private individual who could operate the businesses through “newly established companies”.
“The business rescue practitioners anticipate filing for substantial implementation before the end of the year, which means the successful business rescue of the West Pack entities took about six months to conclude, which for the size and complexity of the business and structure is an excellent result,” he said.
The implementation of the business rescue plans will result in the saving of more than 1,100 jobs, the preservation of about 30 corporate stores and 40 franchise stores as well as the preservation of an iconic brand in Gauteng and surrounding provinces.
— Craig Blumenthal, Fluxmans Attorneys director
“The implementation of the business rescue plans will result in the saving of more than 1,100 jobs, the preservation of about 30 corporate stores and 40 franchise stores as well as the preservation of an iconic brand in Gauteng and surrounding provinces.”
West Pack, which has faced financial distress, entered business rescue on May 15, owing more than R118m to creditors, including Absa, Access Bank and Preference Capital. The financial troubles were caused by a combination of an aggressive growth strategy, economic challenges and the strain of rapid expansion.
According to the application brought by the creditors, Absa has provided financial services to West Pack since 2008, secured by three general notarial bonds.
In April 2022, Absa extended a mortgage-backed business loan of R40.4m and an overdraft facility of more than R38m followed in November 2023, with both requiring the bonds for security. The court heard West Pack’s entry into business rescue and failure to make payments triggered Absa’s rights under the bonds, allowing the bank to claim the full outstanding amount.
West Pack secured a R50m overdraft facility from Access Bank in August 2023, backed by a general notarial bond over its movable assets. The facility’s terms allowed Access Bank to terminate the agreement on notice, with repayment required on demand and all related costs, including legal fees, to be borne by West Pack.
The bond, registered in September 2023, covered R50m in debt and an additional R10m for costs. With West Pack in business rescue, Access Bank’s loan fell due.
In June last year, Preference Capital and West Pack entered into a master rental agreement for equipment, with West Pack agreeing to pay R232,709 monthly for 36 months. The court heard the agreement included a breach clause that stipulated if West Pack entered business rescue Preference could collect the full amount owed.
A general notarial bond registered on July 5 2023 over West Pack's movable assets secures the debt, but is limited to assets within the Pretoria deeds registry area, the court papers state. The company owed Preference Capital R6.05m.
Would you like to comment on this article?
Sign up (it's quick and free) or sign in now.
Please read our Comment Policy before commenting.