JD Group Ltd., a South African furniture retailer, agreed to sell its finance unit to an international consumer finance provider to focus on its sales operations.
“The identity of the purchaser and contents of the offer cannot be disclosed until the required due diligence has been completed,” the Johannesburg-based company said in a statement on the JSE stock exchange news service. The sale “will enable the company to focus on the strategic repositioning and growth of its retail operations, whilst still availing its customers with access to credible and affordable consumer finance,” it said.
JD Group, controlled by Steinhoff International Holdings Ltd., forecast a loss per share of as much as 8.70 rand for the fiscal year through June from a 2.76 rand profit a year ago. South African consumers have been struggling to repay loans amid high unemployment and slower economic growth. South Africa’s Reserve Bank also raised borrowing costs in January for the first time since 2008.
The sale will reduce future funding requirements and improve the structure of the balance sheet, JD Group said.
Ellerine Holdings Ltd., another furniture retailer, which was owned by African Bank Investments Ltd., applied for business rescue, akin to Chapter 11 bankruptcy, last month after losses mounted, sales dropped and consumers increasingly failed to repay their debts.