Edcon Holdings Ltd., South Africa’s largest non-food retailer, said owner Bain Capital Partners LLC is committed to the company as it discusses a restructuring with creditors.
“Bain is deeply involved,” Edcon Chief Executive Officer Jurgen Schreiber said on conference call on Thursday. The private-equity company, which bought Johannesburg-based Edcon in 2007, “will be engaged and stay in the business.”
Edcon, which has about 25 billion rand ($2.1 billion) of debt, also named Goldman Sachs Group Inc. and Houlihan Lokey as advisers for discussions with lenders and 2019 noteholders about new borrowings and refinancing. The retailer has already cut jobs as South Africa’s economic slump contributes to losses and slower sales growth across its more than 1,500 stores.
Schreiber will also step down as CEO on Aug. 15 to take the same role at a non-South African company. He will remain on Edcon’s board in a new vice-chairman role. The company operates fashion chains including Edgars and Jet.
“That I stay on the board is a clear indication that I don’t think the challenges are insurmountable,” Schreiber said. Leaving the CEO post was “truly a personal decision” and there is “a lot of interest” from possible replacements, he said.
The company’s retail-sales growth slowed to 2 percent in the 52 weeks ended March 28 from 5.1 percent a year earlier, it said Thursday in a statement. Credit sales fell 8 percent, and were just 42.7 percent of the 27.5 billion rand. That “continues to delay meaningful growth,” Edcon said. Net financing costs increased by 28.7 percent.
The retailer needs to start repaying about 4.5 billion rand of debt denominated in euros, dollars and rand next year, with another 20 billion rand due by 2019, according to data compiled by Bloomberg.
A group including Franklin Templeton Investment Funds, Ashmore Group Plc and M&G Investments is representing bondholders in the restructuring talks, according to two people familiar with the matter, who asked not to be identified because the discussions are private.
Patrice Weekes, a spokeswoman for Ashmore employed by FTI Consulting in London, and an official at M&G in the city declined to comment. An official at Franklin Templeton in London wasn’t immediately available to comment.
Lender Barclays Africa Group Ltd. is also involved in the debt talks, and it may provide funding to support restructuring, according to two people familiar with the matter. The bank led the syndicate that financed Boston-based Bain’s acquisition of the Edcon in 2007 with more than 4 billion rands of loans. It also bought receivables for about 10 billion rands in 2012.
“Barclays Africa has a duty of confidentiality to its client and is therefore not in a position to comment on the announcements made by Edcon earlier today,” a Barclays Africa official said in an e-mailed response to questions.
Edcon’s 425 million euros ($464 million) of bonds due June 2019 were quoted at 25.5 cents on the euro on Thursday, according to data complied by Bloomberg. They dropped to as low as 15.2 cents in March.
“We are in the middle of discussions and in the middle of negotiations, and there are multiple scenarios and alternatives,” Schreiber said. “The key thing is to get the process done and to get it behind us.”