Despite an impeding deadline to put its house in order by the end of next month, the heavily indebted Edcon Group remains committed to the Botswana market with its Edgars, Jet, CNA and thank U brands.
The Group’s Executive Group Corporate Affairs and Communications, Vannie Pillay revealed the giant retailer recently secured a R500 million bridging loan to help support its liquidity needs while a long-term capital structure solution is finalised.
However, some have viewed the development as the final nail in the coffin for Edcon, as the maturity of this credit facility is September 30.
Nonetheless, Pillay expressed optimism that Edcon’s operations in Botswana will continue as normal, adding there is no need for Edcon customers and workers to start pressing any panic buttons.
“Critical to Edcon’s turnaround strategy is our store rationalization programme, which is applicable to Botswana as well. This programme is a long-term strategy which is aimed at delivering a more efficient store portfolio and includes decisions on space reductions, store closures and store formats, which are made in line with trading conditions, lease renewals and further aimed at increasing trading densities,” explained Pillay in response to a Voice Money questionnaire.
For his part, Edcon Group CEO Grant Pattison admitted Edcon may not survive in its current state.
However, he was quick to point out this does not mean the end of Edcon but rather that it might look a bit different.
“It may be broken into pieces,” confirmed Pattison, adding that Edcon has been decentralized so it runs in its different business units.
Edcon’s net debt at the end of 2017 was R4.2 billion, compared to P24.7 billion the previous year.
“We cannot borrow anymore. We are going to issue new shares on sale. And if anyone is interested in these new shares, that is the process that will be required,” continued Pattison, adding that new shares are expected to serve as a way of raising funds for the group.
Edcon’s owners include Franklin Templeton Investments, Sanford C Bernstein, the Harvard University pension fund and Absa, which took over Edcon when it was suffocating under foreign currency debt used to finance its 2007 takeover.