Bain's Edcon Skips Coupon Payment Amid Debt Restructuring Talks

Edcon Holdings Pty. skipped interest payments this week on secured notes in euros and dollars with a combined value of about $945 million as it seeks to restructure the debt.

The largest South African clothing retailer failed to pay about $45 million due on March 15, according to data compiled by Bloomberg. It has 30 days to make the payments without triggering a default, according to bond documents.

“We elected to utilize the benefits of the agreed grace period for the coupon payment as talks with lenders, bondholders and their representatives were already underway,” a spokesman for the company wrote in an e-mail. “Conversations with these key stakeholders continue. We remain focused on optimizing the capital structure to support long-term growth.”

A group of the 2018 secured bondholders hired adviser PJT Partners Inc. and law firm Weil, Gotshal & Manges to help negotiate with the company and is seeking to enlist other investors, PJT said in a statement on Thursday. Junior Edcon creditors agreed to take losses last year as the company struggled to meet debt commitments due to a weaker rand and slower sales. The retailer was loaded with foreign-currency debt through a 2007 acquisition by Bain Capital Partners.

A spokeswoman for Bain declined to comment on the missed payment.

Edcon’s 300 million-euro bonds due March 2018 dropped as much as 12 cents on the euro on Friday to 26 cents, according to data compiled by Bloomberg.

Before it's here, it's on the Bloomberg Terminal.