Edcon saved by R2.7bn deal
SA’s largest clothing retailer, Edcon, has secured R2.7bn in new funding to recapitalise the cash-strapped company. A Moneyweb report says the deal effectively means Edcon, which owns Edgars, Jet and CNA, won’t be closing its doors, thus staving off what labour unions claimed would have been the country’s biggest single jobs bloodbath.
Edcon said in a statement that it had secured binding agreements with existing secured lenders, the Public Investment Corporation (PIC) on behalf of its client the UIF and participating landlords, which will result in the implementation of the R2.7bn recapitalisation programme.
Had Edcon not secured the funding, it might have gone into a business rescue process, which, given the size of the business, would had little chance of succeeding. Many have called it a major coup for Edcon CEO Grant Pattison, but he reportedly told Moneyweb, ‘There’s no way one person could have pulled this off. On a personal level, this has been the most remarkable process that I’ve ever been a part of in business.’
He added: ‘It was complex with many diverse stakeholders, including existing lenders, unions, the Ministries of Economic Development, Labour and Finance; the PIC and UIF; participating landlords; and our management team and staff that came together to secure Edcon’s future and ultimately thousands of jobs.’
The Southern African Clothing and Textile Workers’ Union (Sactwu) has welcomed the announcement, according to a Cape Argus report.
‘Edcon buys the most locally made clothing products of any of the big six clothing retailers: 44% of the clothing it sells is made locally. Had it closed, the local clothing and textile manufacturing industry would have seen thousands upon thousands of workers being retrenched. In October all social partners signed the Presidential Jobs Summit agreement, committing to create jobs and save existing jobs,’ said Sactwu general secretary Andre Kriel.
‘The combined effort by Edcon, its bankers, the government, Sactwu and Cosatu and its other affiliated trade unions to keep Edcon open gives practical implementation to the Jobs Summit’s commitments. In our view this is an excellent example of what can be achieved when the social partners work together in unison in pursuit of one singular objective of job creation.’
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