Edcon enters business rescue after losing R2bn during SA’s lockdown
Edcon has started with voluntary business rescue proceedings after losing R2bn in turnover during SA’s lockdown, it said in letter to suppliers on Wednesday.
The group said it is unable to meet its financial obligations, and is also expecting “muted demand” once SA’s lockdown ends, BusinessLIVE reports.
The letter states the business rescue proceedings place a moratorium on all legal and enforcement actions against the company.
It said it could still resume operations and open Edgars and Jet stores in “business rescue mode” on May 1 in line with the lockdown regulations.
The letter said the R2.7bn rescue funding from the Public Investment Corporation (PIC) and landlords had been used to meet debt and pay bills up until March 2020.
It is still owed R230m in business rescue funding not yet paid. The letter does not specify who owes it.
Edcon said it is on track to meet bailout targets in December 2019, before the coronavirus lockdown was implemented, adding that it has no cash to pay suppliers as sales dropped by 40% when social-distancing was encouraged from mid-March. It used its last cash for salaries.
The company has faced multiple bailouts after Bain Capital borrowed billions of rand in foreign currency to take the listed firm private and the debt burden became to big for Edcon to meet.