EDCON TO FILE FOR VOLUNTARY BUSINESS RESCUE AFTER LOSING R2BN IN SALES
JOHANNESBURG – Cash strapped retailer Edcon is planning to file for voluntary business rescue to continue operating.
In a statement on Wednesday, the company which owns Edgars and Jet, said it had lost R2 billion in sales since the president declared a state of national disaster over the COVID-19 outbreak in March.
“The Edcon group announced today, that the Board of Edcon has passed a resolution authorising it to file for business rescue in the course of the next few days,” the company said in the statement.
“The sales miss, and the decline in collections of the debtor’s book has meant that meant that Edcon is unable to pay its suppliers for both the March and April month-ends. Paying April salaries will require assistance from the UIF COVID-19 TERS program. Edcon also anticipates that the sales will be depressed for some time during the ‘COVID-19 Risk-Adjusted Strategy’ phase, which may last several months.”
CEO Grant Pattison had warned that the lockdown would result in the group losing R800 million over the initial 21 days, adding that the extension of the lockdown had pushed the retailer over the edge.
“Edcon’s stores will open on the 1st May, but we will have do so under ‘business rescue’. This decision was made in the best interest of our company and all our stakeholders. In the short time that has been available to us, we have been unable to raise the funds needed to pay the creditors for the March and April month-ends,” Pattison said.
“In this circumstance, South African law requires that the company either be placed in liquidation or business rescue. To provide us with a longer period to raise the money, the board has taken a decision to file for business rescue,” he added.
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