A sigh of relief as SA retailer Edcon approved recapitalization plan

Edcon which owns Edgars Stores, Jet and CNA, has been under extreme financial pressure over the past few years.

Owners of South African malls can now breathe a sigh of relief as the Edcon board recently approved the structure of a proposed recapitalization plan and in response, lenders have extended waivers to allow time for the company to turn itself around.

The headlines about retail giant Edcon Holdings on the brink of collapse, have been jarring for South Africa’s big Shopping Mall Owners and the whole nation.

Edcon which owns Edgars Stores, Jet and CNA, has been under extreme financial pressure over the past few years.

The group which occupies big pockets of space in many centres, has been negotiating new cheaper leases with its landlords as a way to cut costs.

The flagship brand, Edgars, operates as a major anchor driving business to smaller retailers in some of the centres across the country. The retailer accounts for 10% of occupancy in SA’s major shopping malls.

Total collapse of the clothing retailer is not in the best interest of the nation as whole. The closure of the company would put jobs at risk and deal a massive psychological blow to the South African economy. 

A Sunday Times newspaper report said that 140,000 of jobs were on the line. 

Grant Pattison, Edcon CEO said the group’s board has approved the proposed recapitalisation plan, but he did not give more details on what it entails, citing confidentiality.

Edcon has debt of R7bn and has had to fight hard to maintain its relevance in a clothing retail market that has seen local and foreign rivals such as Mr Price, H&M, Zara and new online shops that are eating into their market share.

Mall owners Liberty Two Degrees and Hyprop Investments emerged as the biggest losers from the closure of Stuttafords Stores. The 150-year-old department store officially closed its doors in 2017 amid tough economic challenges.