Edcon Holdings Ltd. said 97.3 percent of holders of its 425 million euros ($469 million) of 2019 bonds have accepted an exchange offer as South Africa’s biggest clothing retailer looks to stabilize its balance sheet.
This will cut Edcon’s net cash interest payment obligations by more than 1 billion rand a year and cash-pay indebtedness will drop by about 5.9 billion rand, a decrease of more than 20 percent, Edcon said in a statement Wednesday.
Edcon announced the offer on June 30, asking holders of the bonds to take a loss. The new notes give Edcon the ability to pay interest without using cash.
“The successful closing of this offer not only improves our liquidity but will also help to stabilize the balance sheet,” Chief Executive Officer Jürgen Schreiber said in the statement.
Edcon, owner of fashion chains including Edgars and Jet, was bought by U.S. private equity firm Bain Capital Partners LLC for 25 billion rand ($2 billion) in 2007 in a deal that burdened the retailer with debt.
Edcon’s debt includes notes due in 2016 and 2018. Under borrowing terms agreed to before the restructuring, Edcon would have needed to start repaying about 4.7 billion rand of debt denominated in euros, dollars and rand next year, with another 20 billion rand due by 2019.