Brait has been the scene of spectacular value destruction for billionaire Christo Wiese and other investors over the past three years. Shares in the investment group are down 85% from their peak after it bet billions on British fashion retailer New Look only a year before the Brexit vote.
Luxembourg-listed Brait, which also has a presence on the JSE, paid R14bn for 89% of the high-street retailer in 2015, but has since written the value of its investment down to zero.
And a restructuring deal announced this week will see Brait lose most of the zero too.
Brait, of which Wiese owns more than a third, is backing a transaction that could cut its stake in New Look to as low as 18%, with the aim of reducing the retailer's long-term debt by €1bn (R15.7bn) to €350m.
Think of New Look as something between an Edgars store and a Mr Price. Starting out as a single shop 50 years go in Taunton, in southwest England, New Look grew to more than a 1,000 stores in the UK and Europe and was pushing into China by the time Brait came calling.
"They probably paid too much for it, especially given how much debt New Look already had on the balance sheet," said Vestact portfolio manager Michael Treherne.
New Look sat on a mountain of it, more than €1bn in the form of senior secured notes maturing in 2022.
The tough competitive environment on Britain's high street and consumers' tendency to shift to online stores, especially in clothing and accessories, hit New Look hard.
"There was an element of bad luck, too. Brexit definitely put a damper on retail spending," said Treherne.
Despite some desperate measures - replacing the CEO in 2017, upgrading the e-commerce platform in 2018, closing stores and cutting costs - the debt remained.
And even though it had been trading relatively well for most of last year, the most recent numbers were a shock, with like-for-like sales down nearly 6% in December.
Now a deal is on the table to push the maturity of the debt out to 2024, and Brait, which also holds a number of these notes, will take a haircut here, too. Before the transaction, its notes were valued at R2bn, but will be worth only about R800m after.
Another part of the deal is the issuance of £150m (R2.6bn) worth of new money bonds to refinance New Look, which will in effect shoulder Brait out of most of its equity in the business - leaving it with much less than the 89% it bought four years ago.
"Brait's equity holding in New Look post the transaction will be between 18% and 30%, depending on the take-up by other [senior secured note holders]," the company said. Brait declined further comment.
New Look was not Wiese's first foray into the British high street. In the early 1990s his (then) Pepkor group had a go at it with a Scottish outfit called Your More Store. Wiese soon added a struggling value chain called Poundstretcher, which lifted the store footprint to more than 200.
And it was popular to talk Wiese and his Pep model up on how they were taking the fight to the nation of shopkeepers.
But by the early 2000s his new retail empire was in trouble and Wiese spent as much as a week every month in the UK to sort out the mess. And while "pile 'em high, sell 'em cheap" might have been a magnificent success in SA, thrifty shoppers in Britain were much pickier. Eventually only the property part of Wiese's UK business remained.
But that seems like ancient history.
Brait, which has its roots in the private equity group that bought out Wiese's Pepkor in 2003, was transformed into an investment holding company in 2011, with Wiese the biggest player.
In 2015, after Steinhoff bought Pepkor, Brait sat on a pile of cash, which it quickly employed to buy sizable businesses - foremost among them gym chain Virgin Active, Premier Foods and British frozen foods retailer Iceland.
Now, Iceland is also exposed to the chilly trading conditions in the UK, Virgin Active is vulnerable to the feeble economy in its largest market, SA, and Premier is still recovering from a devastating drought - but they do still represent value.
Said Kagiso Asset Management portfolio manager Simon Anderssen: "The remaining investments have good operating histories and sound prospects. At the current market price, the value of the remaining assets is being unfairly tarnished by New Look's poor performance."
strydomt@sundaytimes.co.za..