Article by: Natalie Müller
This afternoon reports came out that South African retail group Edcon has sent retrenchment notices to all staff after it failed to field concrete offers from potential buyers. Edcon has now served retrenchment notices to about 22,000 employees.
According to a statement released by the group, “The Plan has been prepared on an “accelerated sales process” basis, as interest to invest in or provide funding to the company has not been forthcoming, and the securing of post commencement finance (PCF) not currently imminent.
The key priority and intention of the sales process is to secure the sale of the Business and/or its Divisions as going concerns, which most notably will involve the transfer of some of the employees, resulting in a significant number of jobs being saved at Edcon.
According to the Plan, a significant number of parties who expressed interest in the sales”
The retrenchment are the culmination of years of struggle at Edgars, which was founded in central Johannesburg in 1929 and sells clothes, shoes and cosmetics from just over 200 stores.
As part of Edcon, Edgars was included in an ill-fated buyout by US private equity firm Bain Capital Private Equity LP in 2007, which burdened the parent company with debt just as the economy hit a downturn following the global financial crisis.
“It would make a good case study of how a darling can fall from grace,” said Rella Suskin, head of research at Benguela Global Fund Managers in Johannesburg.
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