Edcon in talks for $216m rescue funding

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Edgars Stores shareholders last week approved the acquisition of intellectual property rights to trademarks and brands assigned to Edgars by Edcon for Zimbabwe. The transaction was for a consideration of $1,5 million, which would be settled through the issuance of 15 million Edgars shares.

Meanwhile Edcon Holdings Ltd. is in talks for as much as 3 billion rand ($216 million) in funding to save South Africa’s biggest non-food retailer, according to people familiar with the matter.

The Public Investment Corp., which oversees state-worker pensions and is Africa’s largest fund manager, may provide 1,8 billion rand to assist the company, said the people, who asked not to be identified as the information isn’t yet public. Landlords may contribute another 700 million rand through reduced rent charges and banks about 500 million rand, they said.

The PIC has received a proposal on Edcon and will make a decision after subjecting it to investment processes, spokesman Sekgoela Sekgoela said in an emailed response to questions.

“The Edcon board has approved the structure of the proposed recapitalisation plan, and in response lenders have extended waivers to allow time for implementation,” a company spokesman said. “The board fully appreciates the support that is being received from all group stakeholders and the commitment that has been shown.”

The 89-year-old Edcon employs about 21 000 employees in a country where more than one in four people don’t have jobs. With more than 1 100 stores across southern Africa, it has struggled amid increasing competition, weak consumer spending and stagnant economic growth in its home market. It was taken over by banks and bondholders in 2016 to avoid failing.

Net third-party debt climbed 67 percent to 7 billion rand at the end of June, from 4,2 billion rand a year earlier, Edcon says on its website. Sales declined 8,5 percent in the period. – Bloomberg