AutoZone enters business rescue
Automotive parts retailer and wholesaler AutoZone has voluntarily entered business rescue. The decision followed a resolution taken by the AutoZone Holdings board of directors last week.
The Companies and Intellectual Property Commission has received AutoZone’s application to be placed in voluntary business rescue.
The group operates nearly 200 stations across the country and employs more than 1 400 staff.
BusinessTech reports that the company said that it is unlikely to pay off its debts when they are due over the next six months.
In a sworn statement of facts, Group CEO Dion De Graaff said that the group underwent a private equity deal in 2014 funded by a responsible level of debt.
That said, the group’s performance did not meet expectations amid the poor performance of the economy, which was exacerbated by the Covid-19 pandemic, civil unrest and a period of stagflation.
During this period, the group faced increasingly burdensome debt repayment structures.
By late 2021, it became clear that operations were contracting below the break-even point.
To address these problems, the lender, Absa, agreed to provide quarterly debt service holidays, offering the business relief.
‘While liquidity was sufficient to halt the negative leverage, it was not enough to return to positive leverage, effectively keeping the business at break-even,’ said De Graaff.
Article disclaimer: While we have made every effort to ensure the accuracy of this article, it is not intended to provide final legal advice as facts and situations will differ from case to case, and therefore specific legal advice should be sought with a lawyer.
